2.1. CORPORATE GOVERNANCE ROLE AND PRINCIPLES

STATEMENT OF THE SUPERVISORY BOARD ON COMPLIANCE WITH THE PRINCIPLES AND RECOMMENDATIONS OF THE CORPORATE GOVERNANCE CODE

Code recommended in the Bank of letter dated 10.04.2014. PJSC ALROSA intends to continue its efforts to introduce the key principles and recommendations from the Corporate Governance Code in activities of the Company.

CORPORATE GOVERNANCE ROLE

Adherence to high corporate governance of the Russian Corporate Governance In April 2015, standards is one of the strategic Code and international standards and based on priorities of the Company. Ensuring recommendations; resolution of shareholder value growth in the long- – commitment to ensuring compliance term perspective is impossible without with standards and requirements of the the Supervisory comprehensive protection of rights and effective legislation and best corporate Board, the interests of all shareholders. Thus, the governance practices and business ethics Company adopted management of PJSC ALROSA pays a lot in operations of its subsidiaries and a new version of of attention to the corporate governance: the Corporate it takes into account best international – requirement for employees and practices, legislative requirements members of governing bodies to be well Governance Code and peculiarities of its shareholding aware of and strictly adhere to provisions structure. of the Code. In April 2015, based on resolution of An agreement with the Russian Institute of the Supervisory Board, the Company Directors was concluded for independent adopted a new revision of the Corporate assessment of the Company in the sphere Governance Code that ensures: of corporate governance. On March 31, – entitlement of shareholders to exercise 2015, the Company was given a National their rights; Corporate Governance rating of 7 out of – the protection of shareholder interests; 10 for Developed corporate governance – management processes transparency; practice. On October 12, 2015, the – professional and ethical responsibility rating was increased to 7+, Developed of managers at all levels; Corporate Governance Practice. – activities. experts on the degree of compliance The Code was developed in accordance of the Company corporate governance with recommendations from the Bank of practices with the Corporate Governance Russia. Code approved by the Government of Moreover, PJSC ALROSA voluntarily the Russian Federation and the Bank of assumed obligations in the sphere of Russia. The rating is also an indicator of corporate relations additional to the ones the Company reliability, as well as a tool required by the effective legislation. The for improving the corporate governance practice and contributes to increasing – the intention to adhere to the standards and requirements of Russian legislation investors. and of the applicable foreign and international legislation, including in the sphere of corporate laws, anti-corruption laws, and security market laws, as well as to adhere to the main principles

84 ALROSA ANNUAL REPORT 2015 “ROAD MAP”

For the purpose of introducing provisions Governance Code of PJSC ALROSA; of the Corporate Governance Code, – Charter of PJSC ALROSA; the Supervisory Board of PJSC ALROSA – Regulations on the General Meeting of approved the Action Plan (Road Map) on Shareholders of PJSC ALROSA; March 20, 2015. – Regulations on the Supervisory Board Within the framework of implementation of PJSC ALROSA; of the Action Plan (Road Map) the following were approved: – Regulations on the Executive Committee of PJSC ALROSA. – New revision of the Corporate

CORPORATE GOVERNANCE PRINCIPLES

In the sphere of safeguarding rights of a governing body of the Company, the shareholders and equal conditions for ability of the Supervisory Board to make shareholders: objective independent judgements and – right of shareholders to take part in take decisions that meet the interests of management of the Company via decision the Company and its shareholders; making on the most important issues concerning activities of the Company; Independent Directors on the Supervisory – giving all shareholders an equal and Board; fair opportunity to participate in the – ensuring an effective functioning of the Supervisory Board in the process of dividends; its convocation and conduct of meetings – ensuring equal conditions for all (voting in absentia), preparation for them shareholders and their fair treatment by and participation in them of members of the Company; the Supervisory Board; – ensuring that shareholders have – establishment by the Supervisory the possibility of unhindered and easy Board of committees for preliminary disposal of their shares; consideration of the most important issues concerning activities of the – ensuring that all shareholders of the Company. Company receive effective protection if their rights are violated. In the sphere of organization and support In the sphere of organization and support of the work of the Corporate Secretary: of the work of the Supervisory Board: – the ensuring by the Corporate Secretary – performance by the Supervisory Board of an effective on-going interaction of strategic management of the Company, with the shareholders, coordination of determination of the main principles of the Company activities on protection of and approaches to organization of a risk rights and interests of the shareholders management and internal control system and support of effective work of the in the Company, control of activities of Supervisory Board. executive bodies of the Company as well In the sphere of development and as performance by the Supervisory Board implementation of the system of of other key functions; remuneration of members of the – accountability of the Supervisory Supervisory Board and executive bodies: Board to shareholders of the Company; – ensuring a fair level of remuneration – effectiveness and professional paid by the Company to attract, competence of the Supervisory Board as motivate and retain the persons with the competence and expertise that the

ALROSA ANNUAL REPORT 2015 85 Company requires; evaluation of reliability and effectiveness of the risk management and internal – integration into the system of control system and corporate governance remuneration of executive bodies and practices. other key managers of the Company of the principle that remuneration depends In the sphere of disclosure of information on the Company performance results and on the Company: their personal contribution to achieving – transparency of the Company and its these results. activities for shareholders, investors and other stakeholders; In the sphere of organization and functioning of the risk management and – timely disclosure of complete, internal control system: up-todate and reliable information on – establishment in the Company the Company to provide the grounds of a wellfunctioning system of risk for taking reasonable decisions by management and internal control aimed shareholders and investors; – provision by the Company of infor- achieving the goals set for the Company; mation and documents upon request – carrying out a Company internal of shareholders in accordance with the audit to ensure systematic independent principle of equal and unhindered access.

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

The report on compliance with in the Annual Report of a Public Joint Detailed information principles and recommendations of Stock Company Report on Compliance on compliance the Corporate Governance Code was with Principles and Recommendations with principles and developed and prepared in accordance of the Corporate Governance Code dated recommendations of the Corporate with recommendations of the Bank of 17.02.2016. Governance Code is given in Appendix 6.11.

SELF-EVALUATION OF THE CORPORATE GOVERNANCE QUALITY

Weight of the component Number in the total Actual Maximum Compliance No. Components of issues score, % points points level

1 Rights of shareholders 22 14 72 79 91.1

2 Board of Directors 56 37 157.5 202 78.0

4 Executive management 5 7 28 38 73.7

Transparency and disclosure 5 15 25 103 135 76.3 of information Risk management, internal 6 16 11 44 63 69.8 control and internal audit Corporate social responsibility, 7 6 6 19 31 61.3 business ethics

8 TOTAL 120 100 423.5 548 77.3

86 ALROSA ANNUAL REPORT 2015 MAJOR TRANSACTIONS AND INTERESTED PARTIES TRANSACTIONS

Resolutions on approval of major – no major transactions whose value Detailed information transactions and interested party amounts to 25 and more percent on major transactions transactions are adopted in PJSC ALROSA of the book value of the Company and interested party in accordance with the Federal Law On assets, determined based on the data transactions is provided Joint Stock Companies: contained in accounting statements as in Appendix 6.10. – 287 interested party transactions were of 31.12.2015, were entered into by the approved in the reporting period; Company.

2.2. CORPORATE GOVERNANCE STRUCTURE

The corporate governance system of the The Supervisory Board has three Company is an elaborate organizational committees: the Strategic Planning structure of governing and control bodies Com-mittee, the HR and Remunerations with a clear interaction mechanism. Committee and the Audit Committee. Activities of the committees are aimed at General Meeting of Shareholders is the supreme governing body of the Company. of work of the Supervisory Board. The Supervisory Board exercises strategic management and controls activities of The Company has in place an effective the Executive Committee that allow internal and external control system: for the day-to-day management of the two independent auditors, the Auditing Company. The President of the Company Committee and the Internal Audit (sole executive body) is the Chairman of Department. the Executive Committee.

ALROSA ANNUAL REPORT 2015 87 External control bodies

AUDITTING EXTERNAL GENERAL MEETENG COMMITTEE INDEPENDENT OF SHAREHOLDERS AUDITORS

ALROSA tend to implement the best standarts of corporate governance, the company approved the corporate Development of a strategy, governance code, taking into account Excutive bodies the best international practices. cjntrol over actives of the excutive bodies CHAIRMAN OF THE MANAGEMENT BOARD SUPERVISORY PRESIDENT BOARD EXCUTIVE COMMITTEE

The committees under the supervisory board CORPORATE SECRETARY STRATEGIC PLANIC COMMITTEE

HR & REMUNERATIONS COMMITTEE HEAD OF THE INTERNAL AUDIT AUDIT COMMITTEE DEPARTMENT

Internal Regulations on Committees are available at control system the corporate web-site

GOVERNING BODIES’ COMPETENCE

Governing body Competence

General Meeting Issues on the agenda, resolutions on which were adopted by a three- of Shareholders quarter majority of shareholders voters: – amendments and additions to the Charter of PJSC ALROSA; – Company reorganization; – Company liquidation; – determination of the number, nominal value, category (type) of authorized shares and rights associated with these shares; – increase in the Company authorized capital through the placement of additional shares; – approval of major transactions; – request for delisting of shares and (or) issuable securities converted

88 ALROSA ANNUAL REPORT 2015 into shares.

Issues on the agenda, resolutions on which were adopted by a simple majority of shareholder voters: – election of members of the Supervisory Board of the Company; – early termination of powers of members of the Supervisory Board of the Company; – election of members of the Company Auditing Committee; – early termination of Company Auditing Committee member powers; – approval of the Company auditor; – approval of annual reports of the Company; – approval of the annual accounting reporting; – – payment (announcement) of dividends; – determination of the procedure for conducting a General Meeting of Shareholders; – share splitting and consolidation; – increase and decrease in the authorized capital of the Company; – – approval of interested party transactions; – and economic activities of the Company; – approval of internal documents that regulate activities of the Company bodies; – determination of remuneration and (or) compensation for the expenses to members of the Supervisory Board of the Company; – remuneration or compensation for the expenses of members of the Auditing Committee of the Company; – other issues concerning the General Meeting of Shareholders pertaining to the Federal Law On Joint Stock Companies.

Supervisory Board Resolutions adopted by a voting majority of members of the Supervisory Board: – determination of priority areas of the activities of the Company including the attraction of long-term investments; – convocation of annual and extraordinary General Meetings of Shareholders of the Company; – approval of the agenda of the annual General Meeting of Shareholders; – determining the date by which the list of persons entitled to – formation of the executive bodies of the Company, determination members of the collegial executive body (Executive Committee), early termination of their powers, determination of the amount of remuneration and compensation to the President and members of the Executive Committee of the Company; – determination of the amount of payment for services of the auditor; – recommendations on the amount of remuneration or compensation payable to members of the Auditing Committee; – recommendations on the amount of dividends on the shares as well as determination of the date on which the persons eligible for – use of the reserve fund and other funds of the Company; – approval of internal documents of the Company except for the internal documents that fall within the competence of the General Meeting of Shareholders; – the Company; – approval of the Registrar of the Company and the terms and conditions of the agreement with the Registrar as well as termination

ALROSA ANNUAL REPORT 2015 89 of the agreement; – approval of reports on results of emissions (additional emissions) of the Company securities; – election and termination of powers of the Corporate Secretary; – other issues stipulated by the Federal Law On Joint-Stock Companies. Resolutions that are adopted by a three-quarter voting majority of members of the Supervisory Board: – election of the Chairman of the Supervisory Board; – establishment of committees of the Supervisory Board of the Company, election of members to committees of the Supervisory Board of the Company; – recommendations to executive bodies of the Company on any issues concerning activities of the Company.

Audit Committee The main goal of establishing the Committee is the improvement provisional consideration and development of recommendations for the Supervisory Board in relation to the issues falling within the competence of the Committee in the following areas: – risk management and internal control procedures; – external independent audit, internal audit; – zero tolerance for unscrupulous actions of the Company employees and third parties; – risks associated with the full disclosure and transparency of information.

Human Resources The main goals of the Committee are: and Remunerations Committee work and resolutions adopted by it through provisional consideration of the issues concerning formation of effective and transparent remuneration practices and development of recommendations for the Supervisory Board; – preparation and submission of recommendations to the Supervisory Board of the Company for adopting resolutions within key areas of the human resources policy of the Company with a view to consolidating the composition and improving the effectiveness of the Supervisory Board and remuneration to the Supervisory Board and the Executive Committee members, the President of the Company and other

Strategic Planning The main reason for establishing the Committee is the improvement Committee through provisional consideration of certain issues falling within the competence of the Supervisory Board and development of recommendations for the Supervisory Board in relation to the issues falling within the competence of the Committee: – determination of the Company priority areas of activities; – adoption of resolutions for entering into major transactions; – management of securities, shares owned by the Company; – management of the Company property; – use of the reserve fund and other funds of the Company.

Executive All the issues concerning the current operations management except Committee for the issues falling within the competence of the General Meeting of Shareholders and the Supervisory Board.

90 ALROSA ANNUAL REPORT 2015 GENERAL MEETING OF SHAREHOLDERS

The General Meeting of Shareholders employees for their work on the is the supreme governing body of PJSC Supervisory Board for the amount ALROSA operating under Russian law, the Charter and the Regulations on the ALROSA. General Meeting of Shareholders of PJSC 6) Election of members of the Supervisory ALROSA. Board of PJSC ALROSA. In accordance with provisions of the 7) Election of members of the Auditing Federal Law On Joint Stock Companies Committee of PJSC ALROSA. and the Charter of the Company, the annual General Meeting of Shareholders 8) Approval of auditors of PJSC ALROSA. of the Company is held no earlier than 9) On approval of an interested party two months and no later than six months transaction, namely a contract for insurance of the liability of members annual General Meeting of Shareholders of the Supervisory Board and Executive the annual report of the Company, annual Committee of PJSC ALROSA. 10) On approval of an interested party transaction, namely a supplemental year are approved, the Supervisory Board agreement to the effective USD 350 mn and the Auditing Committee members loan agreement entered into by PJSC are elected, the auditor of the Company is ALROSA and JSC VTB Bank. approved and other issues falling within 11) On approval of an interested party the competence of the General Meeting transaction, namely a supplemental of Shareholders can be addressed. agreement to the effective USD 250 mn In addition to the annual General Meeting loan agreement entered into by PJSC of Shareholders, an extraordinary ALROSA and JSC VTB Bank. General Meeting of Shareholders can be 12) On participation of PJSC ALROSA in held. the Diamond Producers Association. A General Meeting of Shareholders of 13) On approval of a new revision of the PJSC ALROSA on the results of 2014 was Charter of PJSC ALROSA. held on June 25, 2015 in the town of Mirny, Minutes No. 33 (General Meeting 14) On approval of the Regulations on of Shareholders of PJSC ALROSA dated the General Meeting of Shareholders of June 25, 2015). PJSC ALROSA. 15) On approval of the Regulations on Agenda of the annual General Meeting of the Supervisory Board of PJSC ALROSA. Shareholders of PJSC ALROSA: 16) On approval of the Regulations on the 1) Approval of the Annual Report of PJSC Executive Committee of PJSC ALROSA. ALROSA. 17) On approval of the Regulations on 2) Approval of the annual accounting the Auditing Committee of PJSC ALROSA. reporting including the Financial Perfor- mance Report of PJSC ALROSA. 18) On approval of the Regulations on remuneration to members of the 3) Approval of the distribution of PJSC Supervisory Board of PJSC ALROSA. 19) On approval of the Regulations on 4) On the amount of dividends, time remuneration and compensation to frame and form of their payment based members of the Auditing Committee of on the 2014 performance results and PJSC ALROSA. determination of the date on which the persons eligible for dividends will be No General Meetings of Shareholders of outlined. PJSC ALROSA were held in 2015. 5) On remuneration of the Supervisory Board members who are non-state

ALROSA ANNUAL REPORT 2015 91 SUPERVISORY BOARD

Members of the Supervisory Board of Federal Law On Joint Stock Companies PJSC ALROSA are elected by the General and the Charter of the Company fall Meeting of Shareholders in accordance within the competence of the General with the procedure established by the Meeting of Shareholders. Federal Law On Joint Stock Companies In accordance with the Charter of the and the Charter of PJSC ALROSA up until Company, 15 members are elected to the the next annual General Meeting of Supervisory Board. Shareholders. The Chairman of the Supervisory Board The Supervisory Board of the Company is elected by fellow members of the operates under Russian law, the Charter Supervisory Board owing to a three- and the Regulations on the Supervisory quarter voting majority of the members Board of PJSC ALROSA dated June 25, of the Supervisory Board participating in 2015 (Minutes No. 33). the meeting. The competence of the Supervisory The Regulations on the Supervisory Board includes resolutions on the issues Board of PJSC ALROSA were approved pertaining to the general management by the annual General Meeting of of the Company except for resolutions Shareholders of the Company held on on the issues that in accordance with the June 25, 2015.

SUPERVISORY BOARD COMPOSITION AND PARTICIPATION IN CORPORATE EVENTS

The Supervisory Board of the Company – 14 Non-Executive Directors, including as of December 31, 2015 was composed 3 Independent Directors; of 15 members: – 1 Executive Director.

Participation in corporate events

Surname and initials TOTAL meetings voting in absentia No. Members of the Supervisory Board that left the Supervisory Board on 25.06.2015: F. B. Andreev 1 1 - 1 (until 30.01.2015)

I. K. Demyanov 2 8 2 6 (until 25.06.2015)

S. K. Dubinin 2, 3 8 6 (until 25.06.2015) of them 1 is EiW*

4 D. P. Zakharov 8 2 6 (until 25.06.2015) S. G. Illarionov 5 8 2 6 (until 25.06.2015)

N. E. Kononova 2 6 (until 25.06.2015) 8 6

I. A. Lozhevsky 2 7 (until 25.06.2015) 8 6

S. V. Mestnikov 8 8 2 6 (until 25.06.2015)

D. S. Morozov 2, 9 8 6 (until 25.06.2015) of them 2 are EiWs

N. A. Osipova 10 8 2 6 92 (until 25.06.2015)ALROSA ANNUAL REPORT 2015 A. V. Sharonov 2, 11 (until 25.06.2015) 7 of them 2 are EiWs 5 I. A. Yuzhanov 12 (until 25.06.2015) 8 2 6

Members of the Supervisory Board that were members of the Supervisory Board throughout 2015

13 S. V. Barsukov 15 6 9

14 O. R. Fedorov 15 6 9

15 V. I. Kondratyeva 15 6 9

Members of the Supervisory Board that were elected to the Supervisory Board on 25.06.2015: P. V. Alekseev 16 7 4 3 (since 25.06.2015)

E. A. Borisov 17 7 4 3 (since 25.06.2015)

A. S. Galushka 3, 18 4 1 (since 25.06.2015) of them 2 are EiWs M. V. Gordon 19 (Independent Director) 7 2 3 (since 25.06.2015)

E. V. Grigorieva 20 7 2 3 (since 25.06.2015)

O. V. Grinko 21 (Independent Director) 7 2 3 (since 25.06.2015)

G. I. Danchikova 22 (since 25.06.2015) 7 2 3

A. V. Zharkov 23 (Executive Director) 7 2 3 (since 25.06.2015)

V. I. Nikiforov 24 7 4, 3 (since 25.06.2015) of them 1 is EiW A. G. Siluanov 25 6 3 (since 25.06.2015) 2

P. V. Ulyanov 4, (Independent Director) 26 7 of them 3 are EiWs 3 (since 25.06.2015)

A. O. Chekunkov 27 7 2 3 (since 25.06.2015)

*EiW – expressed in writing. Participation in corporate events

Surname and initials TOTAL meetings voting in absentia No. Members of the Supervisory Board that left the Supervisory Board on 25.06.2015: F. B. Andreev 1 1 - 1 (until 30.01.2015)

I. K. Demyanov 2 8 2 6 (until 25.06.2015)

S. K. Dubinin 2, 3 8 6 (until 25.06.2015) of them 1 is EiW*

4 D. P. Zakharov 8 2 6 (until 25.06.2015) S. G. Illarionov 5 8 2 6 (until 25.06.2015)

N. E. Kononova 2 6 (until 25.06.2015) 8 6

I. A. Lozhevsky 2 7 (until 25.06.2015) 8 6

S. V. Mestnikov 8 8 2 6 (until 25.06.2015)

D. S. Morozov 2, 9 8 6 (until 25.06.2015) of them 2 are EiWs

N. A. Osipova 10 8 2 6 (until 25.06.2015)

A. V. Sharonov 2, 11 (until 25.06.2015) 7 of them 2 are EiWs 5 I. A. Yuzhanov 12 (until 25.06.2015) 8 2 6

Members of the Supervisory Board that were members of the Supervisory Board throughout 2015

13 S. V. Barsukov 15 6 9

14 O. R. Fedorov 15 6 9

15 V. I. Kondratyeva 15 6 9

Members of the Supervisory Board that were elected to the Supervisory Board on 25.06.2015: P. V. Alekseev 16 7 4 3 (since 25.06.2015)

E. A. Borisov 17 7 4 3 (since 25.06.2015)

A. S. Galushka 3, 18 4 1 (since 25.06.2015) of them 2 are EiWs M. V. Gordon 19 (Independent Director) 7 2 3 (since 25.06.2015)

E. V. Grigorieva 20 7 2 3 (since 25.06.2015)

O. V. Grinko 21 (Independent Director) 7 2 3 (since 25.06.2015)

G. I. Danchikova 22 (since 25.06.2015) 7 2 3

A. V. Zharkov 23 (Executive Director) 7 2 3 (since 25.06.2015)

V. I. Nikiforov 24 7 4, 3 (since 25.06.2015) of them 1 is EiW A. G. Siluanov 25 6 3 (since 25.06.2015) 2

P. V. Ulyanov 4, (Independent Director) 26 7 of them 3 are EiWs 3 (since 25.06.2015)

A. O. Chekunkov 27 7 2 3 (since 25.06.2015)

*EiW – expressed in writing.

ALROSA ANNUAL REPORT 2015 93 MEETINGS (VOTING IN ABSENTIA) OF THE SUPERVISORY BOARD

In 2015, a total of 15 corporate events Special Registrar Yakutia Fund Centre. of the Supervisory Board took place, 4. On submission of reports on imple- including 6 meetings and 9 instances of mentation of the Long-Term Development voting in absentia: Program of ALROSA Group until 2023 and on meeting the approved target values of the Key Performance Indicators. 5. On approval of the Report on imple- mentation of the Innovation Development and Technological Upgrade Program of PJSC ALROSA for 2014. 6. On approval of the Action Plan (Road Map) for introduction of the Corporate Governance Code. 7. On the national rating of corporate governance of PJSC ALROSA. 8. On approval of a new revision of the Corporate Governance Code of PJSC ALROSA. 9. On amendments to the Long-Term Development Program of PJSC ALROSA. 10. On application of instructional guidelines concerning development of internal regulatory documents governing activities of PJSC ALROSA. 11. On approval of the Information Policy of PJSC ALROSA. 12. On approval of the auditor of PJSC ALROSA in line with Russian Accounting Standards. 13. On approval of the auditor of PJSC ALROSA to conduct mandatory audit of ALROSA Group in accordance with the International Financial Reporting Standards. 14. On participation of PJSC ALROSA in A total of 117 agenda items were the Diamond Producers Association. examined in 2015, of which the following 15. On approval of a new revision of the were key: Regulations on procurement activities of 1. Election of the President of PJSC PJSC ALROSA. ALROSA. 16. On the procedure for preparation of 2. Approval of the Registrar of PJSC materials for a meeting (voting in ALROSA and terms and conditions of the absentia) of the Supervisory Board of agreement with the Registrar. PJSC ALROSA on approval of interested party transactions. 3. On termination of the agreement for comprehensive servicing of the register 17. On approval of the Work Plan of the of holders of inscribed securities entered Internal Audit Department of PJSC into by PJSC ALROSA and OJSC Republican ALROSA for 2015.

94 ALROSA ANNUAL REPORT 2015 18. On inclusion on the agenda of the and proposals to the General Meeting of annual General Meeting of Shareholders Shareholders concerning the adoption of of PJSC ALROSA items relating to PJSC a resolution. ALROSA shareholder proposals. 27. On inclusion on the agenda of the 19. On inclusion of the persons nominated General Meeting of Shareholders of PJSC by shareholders of PJSC ALROSA on ALROSA of the item On approval of an the list of nominees for election to the interested party transaction, namely a Supervisory Board and the Auditing supplemental agreement to the effective Committee of PJSC ALROSA. USD 350 mn loan agreement entered into by PJSC ALROSA and JSC VTB Bank”and 20. On proposals to the annual General proposals to the General Meeting of Meeting of Shareholders of PJSC ALROSA Shareholders concerning adoption of the to adopt a resolution on approval of the resolution. Charter of PJSC ALROSA, the Regulations on the General Meeting of Shareholders 28. On inclusion on the agenda of the of PJSC ALROSA, the Regulations on General Meeting of Shareholders of PJSC the Supervisory Board of PJSC ALROSA ALROSA of the item On approval of an and the Regulations on the Executive interested party transaction, namely a Committee of PJSC ALROSA. supplemental agreement to the effective 21. On inclusion on the agenda of the USD 250 mn loan agreement entered annual General Meeting of Shareholders into by PJSC ALROSA and JSC VTB Bank of proposals to the annual General and proposals to the General Meeting of Meeting of Shareholders of PJSC ALROSA Shareholders concerning adoption of the to adopt a resolution on approval of the resolution. Charter of PJSC ALROSA, the Regulations 29. Recommendations to the General on the General Meeting of Shareholders Meeting of Shareholders of PJSC ALROSA of PJSC ALROSA, the Regulations on the Supervisory Board of PJSC ALROSA results of 2014 including the amount of and the Regulations on the Executive dividends on shares of PJSC ALROSA and Committee of PJSC ALROSA. the procedure for their payment. 22. On inclusion on the agenda of the 30. On approval of the agenda of the General Meeting of Shareholders of annual General Meeting of Shareholders PJSC ALROSA of the item On approval of PJSC ALROSA. of amendments to the Regulations on 31. On the convocation of the annual remuneration to members of the PJSC General Meeting of Shareholders of PJSC ALROSA Supervisory Board. ALROSA. 23. On inclusion on the agenda of the 32. On approval of the Consolidated General Meeting of Shareholders of Budget of ALROSA Group for 2015. PJSC ALROSA of the item On approval of the Regulations on remunerations and 33. On results of PJSC ALROSA procur- compensations payable to members of ement activities for 2014. the Auditing Committee of PJSC ALROSA. 34. On the taking of positions within 24. On preliminary approval of the Annual governing bodies of other organizations Report of PJSC ALROSA for 2014. by members of the Executive Committee of PJSC ALROSA. reporting including the Financial 35. On changing the structure of the Performance Report of PJSC ALROSA for Annual Report of PJSC ALROSA. 2014. 36. On conducting the annual analysis on 26. On inclusion on the agenda of the the results of establishing a Joint Treasury General Meeting of Shareholders of PJSC of PJSC ALROSA and its subsidiaries. ALROSA of the item: On approval of an 37. On reduction of operating expe- interested party transaction, namely a nditures (expenses) by not less than 2-3 contract for insurance of the liability of percent annually. members of the Supervisory Board and Executive Committee of PJSC ALROSA 38. On approval of the Induction Program

ALROSA ANNUAL REPORT 2015 95 for the newly elected members of the 51. On reforming the residential deve- Supervisory Board of PJSC ALROSA. lopment division of PJSC ALROSA. 39. On the election of the Chairman, 52. On reforming the public utility division the First Deputy Chairman and the Vice of PJSC ALROSA. Chairman of the Supervisory Board of 53. On approval of a new revision of PJSC ALROSA. the Regulations on remuneration to the 40. On the Strategic Planning, Auditing, President of PJSC ALROSA. HR and Remunerations Committees of 54. On approval of a new revision of the the Supervisory Board of PJSC ALROSA. Regulations on remuneration to members 41. On approval of the Work Plan of the of the Executive Committee of PJSC Supervisory Board of PJSC ALROSA for ALROSA. the 2015-2016 corporate year. 55. On approval of internal documents 42. Review of the Report on the work of of PJSC ALROSA: the Regulations on the Internal Audit Department of PJSC internal auditing and the Regulations on ALROSA for 2014. risk management of PJSC ALROSA. 43. On payments in roubles under new 56. On the terms and conditions of export contracts of PJSC ALROSA. insurance of the liability of members of the Supervisory Board and Executive 44. On results of PJSC ALROSA procu- Committee of PJSC ALROSA. rement activities for 2014. 57. On approval of the adjusted 45. On the initial (maximum) price of Consolidated Budget of PJSC ALROSA for audit services in the framework of an 2015. open tender for a contract to conduct a 58. On approval of the Adjusted target statements of PJSC ALROSA prepared in values of the Key Performance Indicators accordance with Russian legislation on of ALROSA Group for 2015. results of 2016-2018 and substantiation 59. On approval of the Regulations on of the initial (maximum) price of audit the quality management system of PJSC services in the framework of this open ALROSA. tender. 60. On approval of the Regulations 46. On the initial (maximum) price of on the procedure for development audit services in the framework of an and implementation of the Innovation open tender for a contract to conduct a Development and Technological Upgrade Program of PJSC ALROSA. statements of ALROSA Group prepared in accordance with the International 61. On approval of the Regulation on Financial Reporting Standards based on increase of investing and operating results of 2016-2018 and substantiation of the initial (maximum) price of audit PJSC ALROSA. services in the framework of this open 62. On the gas assets of PJSC ALROSA, tender. namely the 100% stake in CJSC 47. On approval of the structure and Geotransgaz and 100% interest in the composition of the Annual Report of PJSC authorized capital of Urengoy Gas ALROSA. Company LLC. 48. On optimization and improvement 63. On approval of a new revision of the Program for disposal of non-core assets sponsorship. of PJSC ALROSA. 49. On amendments to the Regulations 64. On approval of an interested party on the Corporate Secretary of PJSC transaction, namely the agreement on ALROSA. between PJSC ALROSA and the Russian 50. On making amendments to regula- Federation On joint consolidated sale of tory documents of PJSC ALROSA due to shares of OJSC Almazny Mir at an auction changing of the Company name. dated October 14, 2014.

96 ALROSA ANNUAL REPORT 2015 65. On determining the position of PJSC ALROSA on the agenda item of the General Meeting of Shareholders of PJSC Severalmaz On election of the General Director of PJSC Severalmaz. 66. On attraction of a strategic investor in HIDROCHICAPA S.A.R.L. 67. On the General Director of Catoca Ltd. Mining Co. (Republic of Angola), an associated company of PJSC ALROSA. 68. On approval of a donation by PJSC Eastern Economic Forum Fund for the organization and running of the Eastern Economic Forum. 69. On approval of an interested party transaction entered into by PJSC ALROSA and the Republic of (Yakutia), namely an agreement for donation of real estate. 70. On approval of donation of property to municipal ownership of Oleneksky Evenki National District, Municipal District of Republic of Sakha (Yakutia). 71. On results of procurement activities of PJSC ALROSA (quarterly). 72. On termination of PJSC ALROSA parti- cipation in some organizations. 73. On approval of interested party tran- sactions.

ALROSA ANNUAL REPORT 2015 97

BIOGRAPHICAL DATA OF THE MEMBERS OF THE SUPERVISORY BOARD (AS OF DECEMBER 2015)

Petr Vyacheslavovich He has no ALEKSEEV participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015 Chairman of the Audit Committee of the Born on May 27, 1981 in .

In 2004, graduated from the Far East 2012-2013 – Chairman of the Board Academy of Public Service in Khabarovsk, of Directors of Republican Investment with a degree in Law, in 2013, the Russian Company OJSC; Academy of National Economy and Public 2012-2013 – Member of the Board of Administration under the President of Directors of Neryuginskaya Poultry Farm; the Russian Federation, with a degree in 2012-2014 – Member of the Board of Public and Municipal Administration. Directors of Almazergienbank (JSC); 2013-2014 – Member of the Board of Previous work experience: Directors Yakutsk JSC; 2009-2010 – Head of Section, Depa- 2013 – present – Member of the Board rtment for Public and Legal Matters, of Directors of Republican Investment Administration of the President and the Company OJSC; Government of the Republic of Sakha 2014 – present – Chairman of the Board (Yakutia); of Directors of Tekhnologiya Bazaltovykh 2010-2013 – Deputy Head, Head, Depa- Materialov LLC; rtment for Public and Legal Matters, 2014 – present – Chairman of the Administration of the President and the Board of Directors Zavod Bazaltovykh Government of the Republic of Sakha Materialov LLC; (Yakutia); 2015 – present – Member of the Board of Directors Optogan CJSC; 2013 – present - General Director of Repu- 2015 – present – Member of the Board of blican Investment Company OJSC. Directors Zheleznye Dorogi Yakutia JSC; Participation in the executive bodies of 2015 – present – Member of the Board other organizations: of Directors Yakutia CJSC;

ALROSA ANNUAL REPORT 2015 99 Sergey Vladimirovich He has no BARSUKOV participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2011 Chairman of the Strategic Planning Committee under the Supervisory Board since October 7, 2015 Born on September 02, 1971 in Kaliningrad.

Graduated from the Mozhaysky Red Participation in the executive bodies of Banner Military Space Engineering other organizations: Academy in 1993 where he specialized 2012 – present – Member of the Board in Mathematical Support for Automated of Directors of ASB; Systems for the Collection and Processing 2013-2014 – Member of the Supervisory of Information, from the St. Petersburg Board of VEB Capital LLC; State University in 2005, with a degree 2014 – present – Member of the Board in Public and Municipal Administration. of Directors of OJSC NDKO AKG; Previous work experience: 2014 – present – Member of the Board of Directors National Payment Card 2008-2010 – Assistant to Vice Chairman System JSC. of the Russian Federation Government – Russian Federation Minister of Finance; 2010 – present – Director of the Financial Policy Department at the Ministry of Finance of the Russian Federation.

Yegor Afanasyevich He has no BORISOV participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015 First Deputy Chairman of the Supervisory Board of PJSC ALROSA since July 2015 Born on August 15, 1954, in Churapcha village, , Yakut ASSR

In 1979, graduated from the Novosibirsk 2002-2011 – Member of the Board of Agricultural Institute, Mechanical Engi- Directors of OJSC Nizhne-Lenskoe; neer. Doctor of Economics. 2002-2011 – Member of the Supervisory Board of OJSC Almazenergiebank; Previous work experience: 2002-2012 – Member of the Supervisory 2003-2010 – Chairman of the Government Board of PJSC ALROSA of the Republic of Sakha (Yakutia); 2006-2011 – Member of the Board of 2010-2014 – President of the Republic of Directors of OJSC Sterkh; Sakha (Yakutia); 2007-2011 – Member of the Board of 2014-present – Head of the Republic of Directors of Republican Investment Sakha (Yakutia). Company. Participation in the executive bodies of other organizations:

100 ALROSA ANNUAL REPORT 2015 Alexander Sergeevich He has no GALUSHKA participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015 Deputy Chairman of the Supervisory Board since July 2015 Born on December 1, 1975 in Klin, Moscow region.

In 1997, graduated from the Moscow Previous work experience: State Social University, with a degree in 2001-2011 – Director of the Company, Economics and Labour Sociology, in 1999, Director, Assessment Expert, Head of graduated from the Intersectoral Institute of Advance Training of the Plekhanov Consultants and Experts at LLC IOC Russian Academy of Economics, in 2001, Center; graduated from the Intersectoral Institute 2011-2013 – Managing Partner at LLC Key of Advance Training of the Plekhanov Partner; Russian Academy of Economics with 2013-2013 – Professor at the Department a degree in Professional Evaluation of Theory and Practice of Public and Expert Inspection of Proprietary administration of the National Research Objects and Rights , in 2011, the Russian University – Higher School of Economics; Presidential Academy of National Economy 2013-present – Minister for the and Public Administration, High-Potential Development of the Russian Far East Management Personnel Reserve Training Participation in the executive bodies of Program. Completed an internship at the other organizations: University of Edinburgh (UK); defended a 2011-2013 – Member of the Supervisory thesis on Strategy for the Development Board of the Agency for Strategic of Human Resources in the Russian Initiatives Federation.

Maria Vladimirovna She has no GORDON participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015 Independent Director Republic of North Ossetia.

From 1991 to 1994, she studied at the Previous work experience: Lomonosov Moscow State University at 1998-2010 – Managing Director, Port- the Faculty of Journalism. In 1994-1995, folio Manager, Head of Emerging studied in the University of Wisconsin Markets Equity Team, Goldman Sachs, (USA), Bachelor in Political Science, in Investments; 1996-1998, in the Fletcher School of Law 2010-2014 – Chief Emerging Markets and Diplomacy at the TUFTS University (USA), Master of Arts degree in Law and Investment Management Co. (PIMCO) Diplomacy. for Developing Countries’ Shares, Investments.

ALROSA ANNUAL REPORT 2015 101 Evgenia Vassilievna She has no GRIGORIEVA participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015 Born on August 19, 1965, in village, Leninsky District, Yakut ASSR.

In 1988, graduated from the Riga Civil 2007-2012 – Member of the Board of Aviation Engineers Institute, with a Directors of OJSC Sakhagiprozem; degree in Electronic Computers – 2007-2012 – Member of the Board of Systems Engineer, in 1998, Ammosov Directors of OJSC Sakhabult; Yakutsk State University, with a degree 2007-2012 – Member of the Board of in Law, in 2001, completed Vocational Directors OJSC Air Company Yakutia; Retraining course at the Far East Academy 2010-2011 – Member of the Board of of Public Service, with a degree in Public Directors of OJSC Saysary; and Regional Administration. 2010-2012 – Member of the Board of Directors of OJSC Sakhaneftegazsbyt; Previous work experience: 2011-2012 – Member of the Board of 2007-2011 – First Deputy Minister of Directors of OJSC ; Property Relations of the Republic of 2011-2012 – Member of the Board of Sakha (Yakutia); Directors of OJSC Yakutsk Airport; 2011 – present – Minister of Property 2011-2012 – Member of the Supervisory and Land Relations of the Republic of Board of PJSC ALROSA Sakha (Yakutia). Participation in the executive bodies of other organizations: 2007-2011 – Member of the Board of Directors of OJSC YakutTISiZ;

Oleg Viktorovich He has no GRINKO participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015, Independent Director (USSR).

In 1987, graduated from the Kherson 2001-2014 – Adviser to Director of Shipbuilding Technical School, in Federal State Unitary Enterprise Foreign 1994, the Higher School of KGB – FSB Trade Association Vneshtechnika; Academy, Russian Federation, Lawyer, 2002 – present – Managing Partner at with a degree in Germany (Philology and CJSC Corporation of Technology and Regional Geography). Investment; 2004 – present – General Director of LLC Previous work experience: SCN;

102 ALROSA ANNUAL REPORT 2015 2006 – present – Advisor to Investment 2013 – present – Member of the Board of and External Relations Director at Directors of OJSC Malaya Energetika; PERESVET Invest Group; 2014-2015 – Chairman of the Board of 2007-2013 – General Director of LLC Directors at OJSC NIPIGORMASH; Public Relations Agency Kitai.ru; 2014-2015 – Member of the Board of 2015 – present – Advisor to General Directors of OJSC NTs VOSTNII; Director of LLC Public Relations Agency 2014-2015 – Member of the Board of Kitai.ru; Directors of OJSC MNIIEKO TEK; 2015 – present – Director for Strategic 2014-2015 – Member of the Board of Communications at CJSC Savings and Directors of OJSC NIIGD; Investments Management Company; 2014-2015 – Member of the Board of 2015 – present – Director of LLC T – Directors of OJSC TSNIIugol; Sistema. 2014-2015 – Member of the Board of Participation in the executive bodies of Directors of OJSC IOTT; other organizations: 2014-2015 – Member of the Board 2004-2015 – Chairman of the Board of of Directors at OJSC National Mining Directors of CJSC Savings and Investments Research Center – Skochinsky Institute Management Company; of Mining; 2011 – present – Member of the 2014-2015 – Member of the Board of Board of Directors of LLC New Plasma Directors of OJSC VNIMI. Technologies;

Galina Innokentievna She has no DANCHIKOVA participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015 village Balagansk district Irkutsk region.

In 1972, graduated from the Yakutsk Previous work experience: Financial Technical School of the Ministry 2007-2010 – Vice Chair of the Government of the Republic of Sakha (Yakutia); Financier), in 1985, the All-Union Extra- 2010 – present – Chair of the Government of the Republic of Sakha (Yakutia). Lawyer). In 2001, defended the doctoral Participation in the executive bodies of thesis Reforming Intergovernmental other organizations: Fiscal Relations in the Russian Federation 2009-2012 – Member of the Board of (Regional Aspect) at the Russian Directors of Sterkh OJSC; Academy of National Economy and Public 2009-2012 – Member of the Supervisory Administration under the President of the Board of OJSC Almazenergobank; Russian Federation. PhD in Economics. 2010-2013 – Member of the Board of Directors of OJSC Republican Investment Company.

ALROSA ANNUAL REPORT 2015 103 Andrey Vyacheslavovich He has no ZHARKOV participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015 (Switzerland).

In 1995, graduated from the Moscow the Russian Federation; State Linguistic University, with a degree 2015 – present – President of PJSC in Foreign Languages; in 1998, the ALROSA. Moscow State University of Commerce, Participation in the executive bodies of with a degree in Accounting and Auditing. other organizations: PhD in Economics. 2009-2010 – Member of the Board of Previous work experience: 2010-2015 – Chairman of the Board of Directors at OJSC PO Kristall; Prioksky Non-Ferrous Metals Plant; 2015 – present – Member of the Board of 2010-2015 – Deputy Head of Gokhran Directors at OJSC PO Kristall. under the Russian Ministry of Finance of

Valentina Ilyinichna She has no KONDRATYEVA participation interest in PJSC ALROSA. Member of the Supervisory Board since Chairman of the HR and Remunerations Committee under the Supervisory Board since September 8, 2015 Ordzhonikidze District, Yakut ASSR.

She is a graduate of the Ammosov Agency Centre for Strategic Research of Yakutsk State University with a degree the Republic of Sakha (Yakutia). in Mathematics, Mathematician-Lecturer Participation in the executive bodies of (1977), and of the Far East Institute of other organizations: Social and Political Science with a degree in Theory of Socio-Political Relations, 2004-2013 – Member of the Board of Political Scientist, Lecturer (1992), as well Directors OJSC Air Company Yakutia; as the Khabarovsk Institute of National 2009-2013 – Member of the Board of Economy with a degree in Economic and Directors of OJSC Media Holding Yakutia; Social Planning, Economist (1994). PhD in 2011-2014 – Member of the Board of Economics. Directors of OJSC Republican Investment Company; Previous work experience: 2012-2013 – Member of the Board of 2003-2013 – First Deputy Minister for Directors of OJSC Vodokanal; Economic Development of the Republic of 2012 – present – Member of the Board Sakha (Yakutia); of Directors of OJSC South Yakutia 2013 – present – Head, State Autonomous Development Corporation;

104 ALROSA ANNUAL REPORT 2015 2012-2013 – Member of the Board of 2014 – present – Member of the Board Directors of OJSC Polar Airlines; of Directors of OJSC Republic of Sakha 2012-2014 – Member of the Board of (Yakutia) Development Corporation. Directors of OJSC Construction Directorate -Tommot-Yakutsk;

Valentin Ivanovich He has no NIKIFOROV participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015 Born on March 14, 1957 in Khorula, Leninsky District, Yakut ASSR.

He is a graduate of the Omsk State Vete- 2012-2014 – Deputy Head, Municipal rinary Institute with a degree in Veterinary Public Institution Administrative Department Science (1979), and the Novosibirsk State of Local Self-Government Authorities of Academy of Economy and Management the Municipal District ‘Nyurba District’, with a degree in Finance and Credit Republic of Sakha (Yakutia); (1999). 2014 – present – Deputy General Dire- ctor, Municipal Budget Institution Business Previous work experience: Incubator in Nyurba. of Nyurba District in Yakutsk;

Anton Germanovich He has no SILUANOV participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015 Chairman of the Supervisory Board of PJSC ALROSA since July 2015

He is a graduate of the Moscow Finance 2012 – present – Russian representative Institute with a degree in Finance and for the Multilateral Investment Guarantee Credit (1985). Doctor of Economics. Agency; 2012 – present – Russian plenipotentiary Previous work experience: representative on the Board of the 2005 – present – Deputy Finance Eurasian Development Bank; Minister of the Russian Federation; 2013 – present – Chairman of the Board 2012 – present – Russian representative of Guardians; Research Advisor – Dean of in the International Monetary Fund; the Finance and Economics Department 2012 – present – Russian representative of the Financial University under the at the International Bank for Recon- Government of the Russian Federation; struction and Development; 2013 – present – Chairman of the

ALROSA ANNUAL REPORT 2015 105 National Financial Council of the Bank of of the Development Fund of the Centre Russia; for Development and Commercialization 2015 – present – Russian representative of New Technologies; at the New Development Bank. 2014 – present – Member of the Super- Participation in the executive bodies of visory Board of State Corporation for other organizations: Assistance to Development, Production 2012 – present – Member of the and Export of Advanced Technology Supervisory Board of Autonomous Industrial Product Rostec; 2015 – present – Member (Executive Committee Russia-2018 Director) of the Supervisory Board of 2012 – present – Member of the Board PJSC Sberbank of Russia; of Guardians of the Charity Fund for 2015 – present – Chairman of the Board Reconstruction of the Resurrection New of Directors of the State Corporation Jerusalem Monastery; Deposit Insurance Agency. 2013 – present – Member of the Board of

Pavel Vasilievich He has no ULYANOV participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015 Independent Director Born on April 21, 1972 in Moscow.

He is a graduate of the State Academy Development Corporation; of Management (1994), IMD Business 2006 – present – Member of the Board School (Lausanne, Switzerland), Program of Directors of Boges Limited and Balp for Executive Development (PED) (2004- Limited; 2005). 2010 – present – Chairman of the Board of Directors – Director B of Forum Muider Previous work experience: B.V; 2007 – present – Director for Energy 2011 – present – Member of the Board of Business, RUSAL Global Management B.V. Directors – Director B of Mega Business Participation in the executive bodies of other organizations: 2013 – present – Member of the Board of 2006 – present – Member of the Board Directors – Director B of Mega Business of Directors of OJSC Nizhnee Priangarye

106 ALROSA ANNUAL REPORT 2015 Oleg Romanovich He has no FEDOROV participation interest in PJSC ALROSA. Member of the Supervisory Board since

He is a graduate of the Lomonosov Directors of OJSC Volgatelecom; Moscow State University with a degree 2004-2010 – Member of the Board of in Mathematics, Applied Mathematics Directors of the Investor Protection (1992). Association; 2009-2011 – Member of the Board of Previous work experience: Directors of OJSC MOEK; 2009-2012 – Head, Department for 2013-2015 – Member of the Board of cooperation with public authorities Directors of International Airport Irkutsk; and companies with public ownership, 2013 – present – Member of the Board Department of Investment and Banking of Directors of OJSC International Airport on Global Markets, CJSC VTB Capital; Vnukovo; 2012-2014 – Adviser to the Head of 2013 – present – Member of the Board of the Federal Agency for State Property Directors of OJSC Vnukovo Airport; Management. 2014 – present – Member of the Board of Participation in the executive bodies of Directors of OJSC Rosinfocominvest; other organizations: 2015 – present – Member of the Board of 2003-2010 – Member of the Board of Directors of PJSC Rosseti;

Alexey Olegovich He has no CHEKUNKOV participation interest in PJSC ALROSA. Member of the Supervisory Board since June 2015

He is a graduate of the Moscow State Insti- Participation in the executive bodies of tute of International Relations, department other organizations: of International Economic Relations (2001), 2015-2015 – Member of the Board of Bachelor in Economics. Directors of OJSC Republic of Khabarovsk Krai Development Corporation; Previous work experience: 2015 – present – Member of the 2006-2009 – Founder and Managing Supervisory Board of Non-Commercial Director, United Gold Company (Alfa Organization Far East Development Fund; Group); 2015 – present – Member of the 2011-2013 – Director, Member of Executive Supervisory Board of Autonomous Board and Investment Committee, Russian Direct Investment Fund LLC RDIF; Resource Development Agency. 2014 – present – Director General, Far East and Baikal Region Development Fund.

ALROSA ANNUAL REPORT 2015 107 COMMITTEES UNDER THE SUPERVISORY BOARD

The Regulations on the Audit Committee, the Strategic Planning (Regulations on the Committees). Any Committee and the Human Resources Member of the Committee, including and Remunerations Committee under the Chairman, can be elected a member the Supervisory Board of PJSC ALROSA of more than two committees under are approved in the new version by the Supervisory Board. decision of the Supervisory Board on July

AUDIT COMMITTEE

The Audit Committee was established on The Committee is comprised of the April 20, 2010 to improve the efficiency members of the Supervisory Board, and quality of work of the Supervisory who are Independent Directors and Board through the fostering of open have professional experience in communication with the Company’s the fields of internal control, audit, auditors, Auditing Committee, divisions, finance, accounting and management representative offices and services of financial institutions. In accordance by way of preliminary consideration with the Regulations on the Audit and development of recommendations Committee under the Supervisory Board for the Supervisory Board relating to of PJSC ALROSA, there are 5 members the Committee’s competence in the of the established Committee. following areas: As of December 31, 2015; five members – risks relating to the completeness of of the Supervisory Board were members the information disclosed of the Audit Committee one of whom is – financial statements; an Independent Director. – external independent audit, internal audit; – internal control procedures.

Participation in the work of the Audit Committee

Surname and initials TOTAL meetings voting in absentia No Members of the Supervisory Board that left the Supervisory Board on 25.06.2015:

1 S. K. Dubinin 4 1 3 (until 25.06.2015)

N. E. Kononova 2 4 1 3 (until 25.06.2015)

I. A. Lozhevsky 1 3 (until 25.06.2015) 4 3

D. S. Morozov 1, 4 4 3 (until 25.06.2015) of them 1 is EiW* Members of the Supervisory Board that were members of the Supervisory Board in 2015

4, 5 S. V. Barsukov 7 3 of them 1 is EiW Members of the Supervisory Board that were elected to the Supervisory Board on 25.06.2015: P. V. Alekseev 6 (Chairman) 3 3 0 (since 25.06.2015)

M. V. Gordon 7 (Independent Director) 3 3 0 108 (since 25.06.2015)ALROSA ANNUAL REPORT 2015 V. I. Nikiforov 8 3 3 0 (since 25.06.2015)

A. O. Chekunkov 3, 9 3 0 (since 25.06.2015) of them 3 are EiWs

*EiW – expressed in writing. Participation in the work of the Audit Committee

Surname and initials TOTAL meetings voting in absentia No Members of the Supervisory Board that left the Supervisory Board on 25.06.2015:

1 S. K. Dubinin 4 1 3 (until 25.06.2015)

N. E. Kononova 2 4 1 3 (until 25.06.2015)

I. A. Lozhevsky 1 3 (until 25.06.2015) 4 3

D. S. Morozov 1, 4 4 3 (until 25.06.2015) of them 1 is EiW* Members of the Supervisory Board that were members of the Supervisory Board in 2015

4, 5 S. V. Barsukov 7 3 of them 1 is EiW Members of the Supervisory Board that were elected to the Supervisory Board on 25.06.2015: P. V. Alekseev 6 (Chairman) 3 3 0 (since 25.06.2015)

M. V. Gordon 7 (Independent Director) 3 3 0 (since 25.06.2015)

V. I. Nikiforov 8 3 3 0 (since 25.06.2015)

A. O. Chekunkov 3, 9 3 0 (since 25.06.2015) of them 3 are EiWs

*EiW – expressed in writing.

MEETINGS (ABSENT VOTING) OF THE AUDIT COMMITTEE

In 2015, there were 4 meetings and 3 Report of PJSC ALROSA for absent voters from the Audit Committee: 2014. 1. 19.02.2015, minutes No. 35 (absent from voting); reporting including the Financial 2. 06.03.2015, minutes No. 36 (absent Performance Report of PJSC ALROSA for from voting); 2014. 3. 19.03.2015, minutes No. 37 (absent from voting); 4. 22.04.2015, minutes No. 38 (meeting); of PJSC ALROSA prepared in accordance 5. 31.08.2015, minutes No. 39 (meeting); with IFRS for 2014. 6. 19.10.2015, minutes No. 40 (meeting); 7. 21.12.2015, minutes No. 41 (meeting). 10. Recommendations to the General Meeting of Shareholders of PJSC ALROSA In 2015, the Audit Committee under of 2014 including the amount of dividends the Supervisory Board of the Company on shares of PJSC ALROSA and the examined 44 issues, of which the following procedure for their payment. are outlined as key: 1. The issue relating to the approval 11. Approval of the Consolidated Budget of the Work Plan of the Internal Audit of the ALROSA Group for 2015. Department of PJSC ALROSA for 2015. 12. Election of Chairman of the Audit Committee of the Supervisory Board of 2. The Work Plan of the Audit Committee PJSC ALROSA. under the Supervisory Board of PJSC ALROSA for 2014-2015 corporate year. 13. Approval of the Work Plan of the Audit Committee under the Supervisory Board 3. Assessment of the Report into the work of PJSC ALROSA for 2015-2016 corporate of the Internal Audit Department of PJSC year. ALROSA for 2014. 14. The initial (maximum) price of audit 4. The procedure for preparation of services in the framework of an open materials for a meeting (of those absent tender for a contract to conduct a from voting) of the Supervisory Board of PJSC ALROSA on approval of related-party statements of PJSC ALROSA prepared in transactions. accordance with the Russian legislation on results of 2016-2018 and substantiation 5. Ensuring Russian Accounting standards of the initial (maximum) price of audit are fully met by the auditor of PJSC services in the framework of this open ALROSA. tender. 6. Ensuring the auditor of PJSC ALROSA 15. The initial (maximum) price of audit conducts a mandatory audit of consolidated services in the framework of an open tender for a contract to conduct a mandatory in accordance with the International Financial Reporting Standards. of ALROSA Group prepared in accordance with the International Financial Reporting 7. The preliminary approval of the Annual Standards based on results of 2016-2018

ALROSA ANNUAL REPORT 2015 109 and substantiation of the initial (maximum) disbursement of loans by PJSC ALROSA price of audit services in the framework of this open tender. the legal entities. 16. The approval of internal documents of 20. Approval of an interested party PJSC ALROSA. transaction, namely the agreement on 17. The information on the procurement between PJSC ALROSA and the Russian list, including those performed not on Federation On joint consolidated sale of a competitive basis and information on shares of OJSC Almazny Mir at auction the use of PJSC ALROSA’s own electronic dated October 14, 2014. trading platform. 21. The plan for auditing of the 18. Approval of the Work Plan of the Internal Audit Department of PJSC ALROSA ALROSA prepared in accordance with IFRS for 2016. for 2015. 19. Approval of amendments to the 22. Approval of interested party tran- Regulations for the procedure of sactions.

RESULTS OF THE ASSESSMENT BY THE AUDIT COMMITTEE OF THE EFFICIENCY OF THE EXTERNAL AUDIT PROCESS

In 2015, the audit committee addressed external audit of the company: the following issues relating to the

Issue Outcome Fulfilment

The approval of the The Audit Committee On 25.06.2015, the auditor of PJSC ALROSA approved the proposal General Meeting of according to the Russian on the recommendation Shareholders of the Accounting Standards - by the Supervisory Board Company approved Limited 19.03.2015, Minutes No. to the General Meeting of Liability Company Financial 37 Shareholders to approve and Accounting Advisors Limited Liability Company as an auditor to conduct Financial and Accounting mandatory annual audit Advisors as the Company’s auditor to conduct reports prepared in mandatory annual audit accordance with the reports prepared in acco- Russian laws based on rdance with the Russian the results of 2015 in laws based on the results Minutes No. 33. of 2015.

The approval of the The Audit Committee The appointment on PJSC ALROSA auditor to approved the proposal on 25.06.2015, at the Annual conduct a mandatory audit the recommendation by General Meeting of the Supervisory Board to Shareholders, (Minutes statements of the ALROSA the General Meeting of No. 33), of Closed Joint- Group in accordance with Shareholders to approve Stock Company Price- the International Financial Closed Joint-Stock Company WaterhouseCoopers Audit Reporting Standards - PriceWaterhouseCoopers as the Company’s auditor 19.03.2015, Minutes No. 37. Audit as the Company’s to conduct the mandatory auditor to conduct audit of consolidated mandatory audit of ALROSA Group prepared reports of ALROSA Group in accordance with the prepared in accordance International Financial with the International Reporting Standards on Financial Reporting Stan- the results of 2015. dards on the results of 2015.

The annual accounting After having reviewed the On 25.06.2015, the Com- (financial) reporting including supplied documentation, pany’s Annual General the Financial Performance including an independent Meeting of Shareholders Report of PJSC ALROSA auditor’s report, the approved the accounting for 2014 - 22.04.2015, Audit Committee assured reports, including the Minutes No. 38 the Supervisory Board that it was possible PJSC ALROSA for 2014 in to submit the annual Minutes No. 33. accounting reports for approval, including the results of PJSC ALROSA to the General Meeting of Shareholders for review, inviting the General Meeting of Shareholders to approve it.

On consolidation of Based on the review of the submitted materials, PJSC ALROSA prepared in including the independent accordance with IFRS for auditor’s report, the 2014 - 22.04.2015, Minutes Audit Committee took No. 38. note of the results of the Company’s consolidated prepared in accordance with the International Financial Reporting Stan- dards into account.

On the plan for the After having considered audit of consolidated the materials provided by the independent auditor, PJSC ALROSA, prepared the Audit Committee in accordance with IFRS approved the Plan for the for 2015 - 21.12.2015, Audit of the Consolidated Minutes No. 41. Financial Reports of PJSC ALROSA for 2015, prepared in accordance with the International Financial Reporting Standards.

ALROSA ANNUAL REPORT 2015 111 HUMAN RESOURCES AND REMUNERATIONS COMMITTEE

The Human Resources and Remunerations – determination of the number and Committee was established on April 20, composition of the Company’s Executive Committee. of the Supervisory Board’s work through The Committee is comprised of 5 preliminary consideration and development members of the Supervisory Board, of recommendations for the Supervisory which are independent (non-executive) Board in relation to the following issues: directors. – determination of key areas of the Company’s HR policy; members of the Supervisory Board were – attraction of skilled experts to the members of the HR and Remunerations Company management and creation of Committee, including two Independent the required incentives for their successful Directors. work;

MEETINGS (ABSENT VOTING) OF THE HUMAN RESOURCES AND REMUNERATIONS COMMITTEE

In 2015, 7 meetings and 2 absent of managing bodies of PJSC ALROSA. voting of the Human Resources and 6. On assessment of the work of Members Remunerations Committee were held: of the Supervisory Board of PJSC ALROSA 1. - 15.01.2015, minutes No. 20 (meeting); in 2014-2015 corporate year and proposal 2. - 18.03.2015, minutes No. 21 (meeting); to the General Meeting of Shareholders 3. - 14.04.2015, minutes No. 22 (meeting); to pay remuneration for the above period. 4. - 22.05.2015, minutes No. 23 (meeting); 7. On assessment of the work of Members 5. - 22.06.2015, minutes No. 24 (absent of the Auditing Committee of PJSC voting); ALROSA in 2014-2015 corporate year 6. - 08.09.2015, minutes No. 25 (meeting); and proposal to the General Meeting of 7. - 09.10.2015, minutes No. 26 (absent Shareholders to pay remuneration for the voting); above period. 8. - 22.10.2015, minutes No. 27 (meeting); 9. - 04.12.2015, minutes No. 28 (meeting); 8. On inclusion on the agenda of the General Meeting of Shareholders of In 2015, the Human Resources and PJSC ALROSA of the item On approval Remunerations Committee under the of Regulations on Remunerations and Supervisory Board of the Company Compensations Payable to Members of considered 37 matters, including the PJSC ALROSA Auditing Committee. following key matters: 9. On approval of a voting bulletin on the 1. On election of the President of PJSC annual General Meeting of Shareholders ALROSA. of PJSC ALROSA for the agenda item 2. On compliance of PJSC ALROSA with of the annual General Meeting of the listing rules. Shareholders of PJSC ALROSA On Payment of Remuneration for the Work 3. The plan for implementation of the as Part of the Supervisory Board to the corporate governance code within the Members of the Supervisory Board, competence of the Human Resources Except for Governmental Officials, in and Remunerations Committee under the Amount Established in the Internal the Supervisory Board of PJSC ALROSA. Documents of PJSC ALROSA. 4. On overlapping positions of members 10. On the fulfilment of instructions of the Board of PJSC ALROSA in other and decisions of the Supervisory organizations’ executive bodies. Board of PJSC ALROSA for 2014-2015 5. On liability insurance of the members corporate year relating to the matters

112 ALROSA ANNUAL REPORT 2015 Participation in the work of the Human Resources and Remunerations Committee

Surname and initials TOTAL meetings voting in absentia No Members of the Supervisory Board that left the Supervisory Board on 25.06.2015: D. P. Zakharov 4, 1 5 1 (until 25.06.2015) of them 1 is EiW*

I. A. Lozhevsky 2 5 4 1 (until 25.06.2015)

D. S. Morozov 4, 3 5 1 (until 25.06.2015) of them 1 is EiW* Members of the Supervisory Board that were members of the Supervisory Board in 2015

4 V. I. Kondratyeva 8 6 2 (Chairman) 7, 5 O. R. Fedorov 9 2 of them 1 is EiW

Members of the Supervisory Board that were elected to the Supervisory Board on 25.06.2015: P. V. Uliyanov 6 (Independent Director) 4 3 1 (since 25.06.2015)

O. V. Grinko 7 (Independent Director) 4 3 1 (since 25.06.2015)

E. V. Grigorieva 8 4 3 1 (since 25.06.2015)

*EiW – expressed in writing. concerning the key tasks of the HR and ALROSA for 2015-2016 corporate year. Remunerations Committee under the 17. On approval of the Regulation on Supervisory Board of PJSC ALROSA. Remuneration to the President of PJSC 11. Determination of the Company’s ALROSA. position in relation to the agenda items 18. On approval of the Regulation on of the General Meeting of Shareholders Remuneration to the Members of the of PJSC Severalmaz. Executive Committee of PJSC ALROSA. 12. On the General Director of Catoca Ltd. Mining Co. (Republic of Angola) 19. On amendments to the Regulations controlled by PJSC ALROSA. on the Corporate Secretary of PJSC ALROSA. 13. On the Work plan of the HR and Remunerations Committee under the 20. On the review of the reports on Supervisory Board of PJSC ALROSA for achievement of quarterly key indicators 2014-2015 corporate year. activities for 1HY 2015. 14. On approval of the Induction Program for newly elected members of 21. On the nomination of candidates to the Supervisory Board of PJSC ALROSA. the Supervisory Board and Auditing Committee of PJSC ALROSA for 2016- 15. On election of Chairman of the HR 2017 corporate year. and Remunerations Committee of the Supervisory Board of PJSC ALROSA. 22. On approval of the amended Regu- lations on remuneration to the President 16. On approval of the Work plan of of PJSC ALROSA. the HR and Remunerations Committee under the Supervisory Board of PJSC 23. On approval of the amended Regu-

ALROSA ANNUAL REPORT 2015 113 lations on remuneration to Members of assessment of the level of fulfilment the PJSC ALROSA Executive Committee. of functional responsibilities by the Corporate Secretary of PJSC ALROSA (quarterly). of independent Members of the Supervisory Board of PJSC ALROSA with 27. On changes in the composition of the independent criteria established by the Board of PJSC ALROSA. the Listing Rules of CJSC FB MMVB. 28. On the reports on the achievement 25. On the terms and conditions of of quarterly key indicators of the liability insurance for members of efficiency of PJSC ALROSA activities the Supervisory Board and Executive over 9 months in 2015. Committee of PJSC ALROSA. 29. On amendments to the Regulations 26. On assess ment of the level of on remuneration to members of the fulfilment of target tasks and on Supervisory Board of PJSC ALROSA.

114 ALROSA ANNUAL REPORT 2015 STRATEGIC PLANNING COMMITTEE

The Strategic Planning Committee General Meeting of Shareholders on was established on April 20, 2010, to issues relating to participation of improve the efficiency and quality the Company in holding companies, of the Supervisory Board’s work financial and industrial groups, through preliminary consideration and associations and other unions of development of recommendations for commercial organizations; the Supervisory Board in relation to the – management of securities, shares owned following issues: by the Company; – management of the Company’s property; – determination of priority areas of the – establishing of the Company’s divisions, Company’s activities; – adoption of resolutions for submission their liquidation. to the General Meeting of Shareholders by the Supervisory Board relating to As of 31.12.2015, the Members of the approval of major transactions and Strategic Planning Committee include related party transactions; nine Members of the Supervisory Board. – adoption of decisions for submission by the Supervisory Board to the

Participation in the work of the Strategic Planning Committee

Surname and initials TOTAL meetings voting in absentia No. Members of the Supervisory Board that were members of the Supervisory Board in 2015

S. V. Barsukov 5 1 7 2 (Chairman)

3, 2 Ye. A. Borisov * 4 1 of them 1 are EiWs**

3 G. I. Danchikova * 7 5 2

4 E. V. Grigorieva * 7 5 2

5, 5 O. R. Fedorov 7 2 of them 1 is EiW

6 V. I. Kondratyeva 4 4 0

Members of the Supervisory Board that were elected to the Supervisory Board on 25.06.2015:

P. V. Alekseev 7 4 4 0 (since 25.06.2015)

O. V. Grinko 4, (Independent Director) 8 4 of them 1 is EiW (since 25.06.2015)

A. V. Zharkov 9 (Executive Director) 4 4 0 (since 25.06.2015)

M. V. Gordon 3, 10 (Independent Director) 3 0 (since 25.06.2015) of them 1 is EiW

* Ye. A. Borisov, G. I. Danchikova and E. V. Grigorieva were Members of the Strategic Planning Committee in 2014-2015 while being Non-Members of the Supervisory Board. *EiW – expressed in writing. MEETINGS (ABSENTEE VOTING) OF THE STRATEGIC PLANNING COMMITTEE

In 2015, 5 meetings and 2 absentee of Regulations on Remunerations and votes of the Strategic Planning Compensations Payable to Members of Committee were held: the PJSC ALROSA Auditing Committee. 7. Inclusion on the agenda of the Annual 1. - 20.03.2015, minutes No. 20 (meeting); General Meeting of Shareholders of 2. - 13.04.2015, minutes No. 21 (absentee PJSC ALROSA of the item On approval of voting); Regulations on the Auditing Committee 3. - 22.05.2015, minutes No. 22 (absentee of PJSC ALROSA. voting); 8. On participation of PJSC ALROSA in 4. - 07.09.2015, minutes No. 23 (meeting); the Diamond Producers Association. 5. - 09.11.2015, minutes No. 24 (meeting); 9. On proposals to the annual General 6. - 18.11.2015, minutes No. 25 (meeting); Meeting of Shareholders of PJSC 7. - 18.12.2015, minutes No. 26 (meeting); ALROSA to adopt a resolution on approval of the Charter of PJSC ALROSA, In 2015, the Strategic Planning the Regulations on the General Meeting Committee under the Supervisory of Shareholders of PJSC ALROSA, the Board examined 31 issues, of which the Regulations on the Supervisory Board following were key: of PJSC ALROSA and the Regulations 1. The inclusion onto the agenda of on the Executive Committee of PJSC the General Meeting of Shareholders ALROSA. of PJSC ALROSA of the item On the 10. On election of Chairman, Deputy approval of an interested party Chairman of the Strategic Planning transaction, namely a supplemental Committee under the Supervisory agreement to the effective USD 350 Board of PJSC ALROSA. million loan agreement entered into 11. On approval of the Work Plan of the by PJSC ALROSA and JSC VTB and of Strategic Planning Committee of the proposals to the General Meeting of Supervisory Board of PJSC ALROSA for Shareholders on which a decision is 2015-2016. required. 12. On approval of proposals based on the 2. The inclusion onto the agenda of 2014 audit results for implementation the General Meeting of Shareholders of the PJSC ALROSA Program for Long- of PJSC ALROSA of the item On the Term Development up to 2023. approval of an interested party 13. On reforming the residential deve- transaction, namely a supplemental lopment division of PJSC ALROSA. agreement to the effective USD 250 14. On reforming the public utility division million loan agreement entered into of PJSC ALROSA. by PJSC ALROSA and JSC VTB Bank and 15. On approval of the Regulations on of proposals to the General Meeting the quality management system of PJSC of Shareholders on which a decision is ALROSA. required. 16. On approval of the Regulations on the 3. On approval of a new version of the quality management system of PJSC Regulations on Procurement of PJSC ALROSA. ALROSA. 17. On approval of the Regulations 4. Approval of the Registrar of the on the planning and execution of conditions of his agreement with PJSC the Innovative Development and ALROSA. Technological Modernization Program 5. On termination of the comprehensive of PJSC ALROSA. servicing agreement for the register 18. On approval of the clarified of holders of inscribed securities consolidated budget of PJSC ALROSA entered into by PJSC ALROSA and OJSC and clarified key performance Republican Special Registrar Yakutia indicators for 2015. Fund Centre. 19. On approval of the adjusted 6. The inclusion onto the agenda of the Consolidated Budget of PJSC ALROSA General Meeting of Shareholders of for 2015. PJSC ALROSA of the item On approval

116 ALROSA ANNUAL REPORT 2015 Budget of PJSC ALROSA for 2016. of KPIs of ALROSA Group for 2015. 24. On amendments to the Program for 21. On approval of the Order for an Alienation of non-core assets of PJSC increase in investing and operating ALROSA. 25. On approval of transactions with of PJSC ALROSA. interested parties. 22. On approval of the Information Policy 26. On termination of participation in of PJSC ALROSA. other entities. 23. On approval of the Consolidated

ROLE OF THE SUPERVISORY BOARD IN THE ORGANIZATION OF THE EFFICIENT RISK

In 2015, the Supervisory Board developed stakeholder engagement and assessment and approved regulatory documents procedure of activities relating to the relating to corporate governance: internal audit. The new edition of the Provisions for risk – Regulations on internal audit of PJSC ALROSA; preparation and approval of documents, – Regulations on risk management of terminology, introduces the concept of PJSC ALROSA. The Regulations on the internal audit authorities and responsibilities of the nature of interaction between participants internal audit management, governs in the risk management process.

REMUNERATION TO THE MEMBERS OF THE SUPERVISORY BOARD

In accordance with the decision taken at the the 2014-2015 corporate year, calculated annual General Meeting of Shareholders in accordance with the Regulations on of PJSC ALROSA, remuneration to the the Remuneration to the Members of the Members of the Supervisory Board was Supervisory Board of PJSC ALROSA dated accrued and paid based on the results of June 25, 2015 (Minutes No. 33).

Premium for the Chairmanship in the Committees or Remuneration for Chairmanship in the Basic participation in Supervisory Board Total amount component, the work of the of the remuneration, No. Surname and initials roubles Supervisory Board, % RUB roubles 1 F. B. Andreev 4,000,000 3,272,727 20% 654,545 3,927,273 2 S. K. Dubinin 4,000,000 3,636,364 20% 727,273 4,363,636 3 D. P. Zakharov 4,000,000 4,000,000 4,000,000 4 V. I. Kondratyeva 4,000,000 4,000,000 4,000,000 5 N. E. Kononova 4,000,000 3,818,182 3,818,182 6 I. A. Lozhevsky 4,000,000 4,000,000 4,000,000 7 O. R. Fedorov 4,000,000 2,909,091 20% 581,818 3,490,909 8 D. S. Morozov 4,000,000 3,636,364 3,636,364 9 I. A. Yuzhanov 4,000,000 4,000,000 50% 2,000,000 6,000,000 10 A. V. Sharonov 4,000,000 3,454,545 3,454,545

TOTAL 40,690,909

ALROSA ANNUAL REPORT 2015 117 In 2015, the total Company Supervisory Board, for which the remuneration to the Members of the legislation stipulates the restriction or Company’s Supervisory Board was prohibition of receiving any payments 40,690,909 RUB (in 2014 – 28,300,000 from commercial organizations; RUB). The above remunerations are – Members of the Supervisory Board, paid to the members of the Supervisory who are at the same time the sole Board of the Company in full. executive body or a member of In 2015, the Company and legal the collegial executive body of the entities from the ALROSA Group did Company. not grant any loans to Members of the The amount of the remuneration for Supervisory Board. the participation in the work of the Remunerations to the Members of the Supervisory Board payable to each Supervisory Board are paid out of the Member of the Supervisory Board is Company’s net profit. If there is no calculated based on the total number Company net profit, the remuneration of meetings of the Supervisory Board to the Members of the Supervisory for the past corporate year held as of Board is nether determined, nor paid. March 31 of the current year and the The remuneration (basic and premium) number of meetings attended by the is not paid to: Member of the Supervisory Board. – The Chairman or members of the The basic component amount of Supervisory Board who hold state remuneration is determined based on or municipal employee status, in the Company’s revenue for the relevant accordance with the current legislation financial year. In 2015, the basic of the Russian Federation; component totalled to 4,000,000 RUB. – The Chairman or members of the

Amount of the revenue, RUB bn Basic component, RUB more than 200 6,000,000 more than 30 4,000,000 more than 10 2,000,000

In addition to the basic remuneration to three meetings of a Committee under the the members of the Supervisory Board, Supervisory Board were held; – a Member of the Supervisory Board of additional responsibilities associated participated in less than 50% meetings with the chairmanship of the Supervisory (in presentia and in absentia voting) Board and Committees hereunder as of a committee under the Supervisory follows: Board held in a corporate year or during – 50% of the basic remuneration for working hours in a corporate year (for chairmanship of the Supervisory Board; newly elected (out-going) Members of – 20% of the basic remuneration for the the Supervisory Board). chairmanship of committees under the Travel expenses and accommodation Supervisory Board. The above premiums shall not be paid if: of the Supervisory Board of the duties – during the corporate year, less than required of them are also compensated.

118 ALROSA ANNUAL REPORT 2015 PRESIDENT AND EXECUTIVE COMMITTEE

Management of the Company is carried Shareholders and the Supervisory Board. out by the President (sole executive body) The President and Executive Committee and the Executive Committee (collegial coordinate the decision-making of the executive body). General Meeting of Shareholders and The scope of duties of the Company’s Supervisory Board and reporting on it executive bodies includes all current hereafter. As of 31.12.2015, the Executive activity management issues, except Committee of the Company consisted of for the issues within the exclusive 13 people. competence of the General Meeting of

ALROSA ANNUAL REPORT 2015 119

BIOGRAPHICAL DATA OF THE MEMBERS OF THE EXECUTIVE COMMITTEE (AS OF DECEMBER 31, 2015)

Andrey Vyacheslavovich ZHARKOV He has no participation interest President of PJSC ALROSA in PJSC ALROSA. Chairman of the Board of the Company Date of appointment: April 24, 2015 Did not enter into transactions relating to purchase/disposal Born on February 11, 1973 in Geneva Labour activities over the last 5 years: of shares in 2015. (Switzerland). 2010-2015 - Deputy Head of Gokhran In 1995, he graduated from the Moscow under the Ministry of Finance of the State Linguistic University, with a degree Russian Federation; in Foreign Languages; in 1998, he obtained 2015 - present - President of PJSC a degree in Accounting and Auditing ALROSA. from the Moscow State University of Employment contract expires on: Commerce. PhD in Economics. 23.04.2018

Ivan Kirillovich DEMYANOV Participation interest in PJSC ALROSA – Vice President of PJSC ALROSA. Supervises 0.0007%. social and personnel policies of the Company. Did not enter into Date of appointment: October 26, 1995 transactions relating to purchase/disposal of shares in 2015. Born on June 5, 1942 in Ilovka, Belgorod Labour activities over the last 5 years: Region. 1995 – present – Vice President of PJSC In 1982, he graduated from the Higher ALROSA. Party School of Khabarovsk.

Igor Mikhailovich KULICHIK He has no Vice President and CFO of PJSC ALROSA participation interest Date of appointment: August 10, 2009 in PJSC ALROSA.

Born in Brest, Belorussia, on April 5, 1967. Labour activities over the last 5 years: Did not enter into In 1990, graduated from Ordzhonikidze 2009 – present – Vice President and CFO transactions relating Moscow Aviation Institute with a degree of PJSC ALROSA to purchase/disposal in Mechanical Engineering, in 1992, from Employment contract expires on: of shares in 2015. the Zhukovsky Air Force Engineering 09.08.2017 Academy with the title of Engineer Mathematician.

ALROSA ANNUAL REPORT 2015 121 Alexander Grigoryevich MATVEEV He has no participation interest Head of Legal Department of PJSC in PJSC ALROSA. ALROSA. Did not enter into transactions relating to purchase/disposal Born on August 3, 1976 in Omsk. Labour activities over the last 5 years: of shares in 2015. In 1998 graduated from Omsk State 2009 – present – Head of PJSC ALROSA University with a degree in Jurisprudence. Legal Department.

Alexander Fedorovich MAKHRACHEV Participation interest Director of MPD of PJSC ALROSA in PJSC ALROSA – 0.0029%. Date of appointment: March 18, 2008 Did not enter into Born at the Aleisk State farm, the Aleisk conditions, at the Russian Federation transactions relating District of the Altai Region, on October State Academy of National Economy. In to purchase/disposal 31, 1956. 2007, he graduated from the Moscow of shares in 2015. State University of Mining, where he Institute (graduated in 1979) where he Labour activities over the last 5 years: 1996, he took a refresher training course 2008 – present – Director of Udachny under the program General management MPD of PJSC ALROSA. of a mining enterprise in free market

Yury Konstantinovich OKOEMOV Participation interest Vice President of PJSC ALROSA. Supervises in PJSC ALROSA – sales policies of the Company.

Date of appointment: August 6, 2009 Did not enter into transactions relating Brief biographical data: Russian Presidential Academy of National to purchase/disposal Born on January 1, 1962, in the village of Economy and Public Administration with of shares in 2015. Kazachye, Region, Yakutia. Graduated from a physics and Labour activities over the last 5 years: mathematical school in the village of 2009 – present – Vice President of PJSC Verkhneviluisk in the Yakut ASSR in 1979. ALROSA. In 1985, he graduated from the Moscow Employment contract expires on: State Institute of Steel and Alloys, with a 05.08.2017 degree in Metal Physics, in 1996, from the

122 ALROSA ANNUAL REPORT 2015 Sergey Nikolaevich PUSHKIN He has no Vice President of PJSC ALROSA. Oversees participation interest in PJSC ALROSA. as well as the development of the Company’s projects in Africa. Did not enter into transactions relating Date of appointment: January 25, 2010 to purchase/disposal of shares in 2015. Born on February 26, 1967, in Bolshoe 1992). Mamleevo village, Gorky region. He is Labour activities over the last 5 years: a graduate of the Moscow Institute of 2010 – present – Vice President of PJSC Physics and Technology (Aerodynamics ALROSA. Employment contract expires on: 24.01.2018 (graduation year 1990), and of the Air Force Engineering Academy (Aircraft and Engines Department) (graduation year

Ilya Petrovich RYASHCHIN He has no First Vice President of PJSC ALROSA. participation interest in PJSC ALROSA. affairs of the Company. Did not enter into Date of appointment: June 9, 2012 transactions relating to purchase/disposal Born on May 23, 1973 in Gorky. and Budgeting Department at OJSC of shares in 2015. In 1996, graduated from the Lobachevsky Russian Railways. State University of Nizhny Novgorod, 2012 – present – First Vice President of with a degree in Credit and Finance. PJSC ALROSA; Labour activities over the last 5 years: From 24.10.2014 to 23.04.2015, he was 2003-2012 - Deputy Head and First Deputy President of PJSC ALROSA. Head of the Financial Management Employment contract expires on: Department and the Corporate Finance 08.06.2016 Department and Head of the Planning

Ravil Shamilyevich SANATULOV He has no Director of Aikhal MPD of PJSC ALROSA. participation interest in PJSC ALROSA. Date of appointment: September 27, 2007 Did not enter into Born in , the District, transactions relating Yakutia, on May 22, 1963. Labour activities over the last 5 years: to purchase/disposal He graduated from the Irkutsk Polytechnic 2007 – present – Appointed Director of of shares in 2015. Institute in 1986 with a degree in mining ALROSA’s Aikhal Mining and Processing engineering, and specialized in the Division. technology and integrated mechanized

ALROSA ANNUAL REPORT 2015 123 Valery Petrovich SEROV He has no Chief Geologist of PJSC ALROSA. participation interest in PJSC ALROSA. Date of appointment: February 1, 2011 Did not enter into Born in Kalush, the Ivano-Frankovsk 2011 – present – Chief Geologist of PJSC transactions relating Region of Ukraine, on July 18, 1957. ALROSA. to purchase/disposal He graduated from the Moscow Employment contract expires on: of shares in 2015. Geological Prospecting Institute in 1980 31.07.2016 with a degree in geological surveying, prospecting and exploration of mineral Labour activities over the last 5 years:

Igor Vitalyevich SOBOLEV Participation interest in PJSC ALROSA – First Vice President and Executive Director 0.002%. of PJSC ALROSA Date of appointment: January 1, 2012 Did not enter into transactions relating Born in Kimovsk, Tula Region, on Labour activities over the last 5 years: to purchase/disposal November 16, 1969. 2007-2011 - Director of Capital Construction of shares in 2015. He graduated from the Tula State Division of PJSC ALROSA; Technical University in 1993 with a degree 2012 - present - First Vice President and in mining construction engineering, Executive Director of PJSC ALROSA specialized in Mine and underground Employment contract expires on: construction. 31.12.2016

Alexander Sergeevich CHAADAEV Participation interest in PJSC ALROSA – Vice President for Innovation, director of 0.0004%. Yakutniproalmaz institute Date of appointment: May 28, 2012 Did not enter into transactions relating to purchase/disposal Born in Yakutsk, Republic of Sakha Labour activities over the last 5 years: of shares in 2015. (Yakutia), on September 8, 1960. 2007-2012 - Director of the ALROSA He graduated from the Tyumen Civil YakutNiproAlmaz Research Institute of Engineering Institute with a degree in PJSC ALROSA; Civil Engineering in 1982, and specialized 2012 – present – Vice President for in Industrial and Civil Construction Innovation and Director of Yakutniproalmaz Engineering. In 2001, he graduated from Research Institute of PJSC ALROSA. the Russian Federation State Finance Employment contract expires on: Academy with a degree in Credit and 27.05.2017 Finance. PhD in Economics.

124 ALROSA ANNUAL REPORT 2015 Andrey Nikolaevich CHEREPNOV He has no Chief Engineer of PJSC ALROSA. participation interest in PJSC ALROSA. Date of appointment: June 29, 2015 Did not enter into He is a graduate of the Irkutsk Polytechnic 2012-2015 - Deputy Chief Engineer for transactions relating Institute with a degree in Mine Surveying, Production of PJSC ALROSA; to purchase/disposal Mining Engineer-Surveyor (1988). 2015 – present – Acting Chief Engineer, of shares in 2015. Labour activities over the last 5 years: Chief Engineer of PJSC ALROSA. 2001-2012 - Deputy Chief Surveyor, Chief Employment contract expires on: Surveyor of PJSC ALROSA; 08.06.2016

REMUNERATION PAID TO THE EXECUTIVE COMMITTEE

The Members of the Executive Committee Executive Committee for the achievement are entitled to a salary, premiums, voluntary of KPIs relating to production and medical insurance, compensation for business activities. The KPIs system for the executive bodies as Members of the Board of Directors implemented by the Company requires of ALROSA Group individual enterprises. the senior management to ensure the Salary and premiums payable to goals of the Long-term Program for Members of the Executive Committee of ALROSA Group Development up to 2023 the Company shall be determined in their are achieved. employment contracts. The structure of the annual income of the members of the Company’s executive On November 10, 2015, the Supervisory bodies includes payments based on Board of the Company approved a the timely and full achievement of the new version of the Regulations on ALROSA Group KPIs and more than 78% Remuneration to President of PJSC ALROSA of individual KPIs. and Regulations on Remuneration to Members of the Executive Committee of In 2015, the Company and legal entities from ALROSA Group did not grant any The annual remuneration is paid to loans to the President or Members of the the President and the Members of the Executive Committee.

REMUNERATION PAID TO THE EXECUTIVE COMMITTEE

Amount of payment, in thousands Indicator of roubles Remuneration for participation in the governing body 0 Salary 229,111 Premiums 396,323 Commissions 0 Privileges 0 Other remunerations 103,740 TOTAL 729,174

ALROSA ANNUAL REPORT 2015 125 CORPORATE SECRETARY

Rights and obligations of the Corporate Meeting of Shareholders, Supervisory Secretary of the Company are set forth in Board, Committees under the Supervisory the Charter of the Company and detailed Board, Executive Committee and Auditing in the Regulations on the Corporate Committee; Secretary of PJSC ALROSA (Regulations – to support the members of the on the Corporate Secretary of PJSC ALROSA). functions, including initiation of newly In accordance with the Regulations on elected members of the Supervisory the Corporate Secretary, the Corporate Board; Secretary’s objectives are: – to develop the corporate governance system of the Company in line with – to ensure compliance by the executive the interests of all shareholders and bodies and employees of the Company Company; with the legislative requirements, the – to ensure the growth of investment Charter and internal documents of the attractiveness of the Company, to Company that guarantee rights and legal promote its sustainable development. interests of shareholders; – to ensure compliance with property The Corporate Secretary is a Company interests of shareholders in execution of their rights, to maintain the balance accountable to the Supervisory Board, of interests between the participants of and administratively subordinate to the corporate legal relations; President of the Company. – to support the activities of the General

CORPORATE SECRETARY’S BIOGRAPHICAL DATA AS OF DECEMBER 31, 2015

Andrey Grigoryevich LEKAREV Head of the Directorate for Corporate Support, Corporate Secretary of PJSC ALROSA

Born on May 7, 1981, in Kuybyshev. He graduated from the Moscow State Law the Federation and the State Duma of Academy in 2003 with a degree in Law the Federal Assembly of the Russian and from the International Business Federation. School (Financial University under the Member of the All-Russian Public Government of the Russian Federation) Organization National Association of in 2011 with an MBA in International Corporate Secretaries. Banking Management. From 2012 through 2015, Mr. Lekarev He also holds a PhD in Law from the has been amongst the Top 25 Directors Moscow State Law Academy (2006). Previous work experience: Secretaries, in an annual national ranking 2010 - present - Secretary of the compiled by the Independent Directors Supervisory Board, Head of the Association (IDA), the Russian Union of Directorate for Corporate Support, Industrialists and Entrepreneurs (RSPP) Corporate Secretary of PJSC ALROSA; in partnership with PwC and the Moscow 2007-2010 - Chief Legal Advisor in PJSC Exchange for the ‘Director of the Year’ VTB Bank’s Legal Department. National Award category. For achievements in the area of Before 2007, he worked in the corporate management, he was awarded

126 ALROSA ANNUAL REPORT 2015 the Director of the Year (winner in As of 01.01.2015, A. G. Lekarev held the Corporate Management Director - 27,005 ordinary shares (0.00037%). Corporate Secretary category, 2013). On 10.02.2015, A. G. Lekarev alienated He is also the winner of the XIII annual 2,800 shares and after the change A.G. Top 1,000 Russian Managers 2015 Lekarev held 24,205 shares (0.00033%). prize, in the Best Corporate Governance On 11.02.2015, A. G. Lekarev alienated Director category. 5,800 shares and after the change A.G. Lekarev held 18,405 shares (0.00025%). He is a Class 3 Advisor to the State Civil On 24.02.2015, A. G. Lekarev alienated Service. 6,200 shares and after the change A.G. He has no family ties with any members Lekarev held 12,205 shares (0.00017%). of PJSC ALROSA’s executive or executive On 13.08.2015, A. G. Lekarev alienated and bodies responsible for the control 4,500 shares and after the change A.G. Lekarev held 7,705 shares (0.0001%). activities of PJSC ALROSA. As of December 31, 2015, A. G. Lekarev Information on A. G. Lekarev’s holds 7,705 ordinary shares (0.0001%) of transactions, involving purchase or PJSC ALROSA. alienation of PJSC ALROSA’s ordinary shares for 2015:

ALROSA ANNUAL REPORT 2015 127 2.3. INTERNAL CONTROL SYSTEM

ANNUAL MEETING OF SHAREHOLDERS

PRESIDENT SUPERVISORY BOARD OF THE COMPAMY

AUDITING AUDIT INTERNAL COMMITTEE COMMITTEE AUDIT DEPARTMENT

AUDITING COMMITTEE

The Auditing Committee was elected legislation. The Auditing Committee of 5 at the annual General Meeting of members is elected for the period until the next annual General Meeting of economic activities of PJSC ALROSA and Shareholders. compliance with Russian Federation legal

THE AUDITING COMMITTEE OF PJSC ALROSA ELECTED BY THE ANNUAL GENERAL SHAREHOLDERS MEETING OF PJSC ALROSA ON JUNE 25, 2015, AND DECEMBER 31, 2015 COMPRISES THE FOLLOWING MEMBERS:

No. Surname and initials Position

1 A. V. Glinov Deputy Director of the Administrative Department at the Ministry of Finance of the Russian Federation; Chairman of the Auditing Committee.

Head of the Department of the Rough and Polished Diamond Complex Property, Financial 2 A. I. Vasilyeva and Insurance Organizations, Ministry of Property and Land Relations, Republic of Sakha (Yakutia).

Assistant Officer of the Major Organization Management Division of the Corporate 3 D. P. Kim Governance Department at the Ministry of Economic Development of the Russian Federation.

4 M. V. Mikhina Adviser to the Head of the Federal Agency for State Property Management;

5 V. N. Pushmin Deputy Finance Minister of the Republic of Sakha (Yakutia).

In 2015, the Auditing Committee statements. activities of PJSC ALROSA for 2014. The 2. Analysis of the implementation of the audit was conducted during the period of basic production indicators and planned March 16, 2015, to March 25, 2015. economic indicators, including the The plan for the audit conducted by the Auditing Committee included the results. following items:

128 ALROSA ANNUAL REPORT 2015 4. Analysis of accuracy of calculation and the Russian Federation. payment of dividends. 10. Analysis of PJSC ALROSA purchasing performance in 2014. asset disposal programme, including 11. Analysis of the corrective actions agricultural assets, in 2014. following the previous internal audit. 6. Analysis of the results of innovative The Auditing Committee feedback, based implementations in 2014. on the results of the revision of PJSC 7. On the implementation process of the ALROSA for 2014, was submitted at the “road map” for privatization of shares of annual General Meeting of Shareholders PJSC ALROSA. of the Company that took place on June 25, 2015. 8. Analysis of the results of PJSC ALROSA’s sales policy in domestic and foreign In 2015, the members of the Auditing markets in 2014. Committee of the Company were not remunerated for the performance of 9. Assessment of the results (status) of their duties. instructions from the President of the Russian Federation and Government of

INTERNAL AUDIT

The Internal Audit Department is – corporate controlling section. functionally subordinate to the Targets (key performance indicators) of Supervisory Board and administratively the Department in the reference year: subordinate to the President of the Company. The work plan of the Internal – Audit Department of the Company is plan with the established quantitative approved by the Supervisory Board of indicator. the Company. – The number of the agreed recommen- The work of the Internal Audit dations based on the results of the audit Department in 2015 was performed in is more than 50%. accordance with the Regulations on the – The development and submission of a Internal Audit Department, Regulations set of documents on the improvement of on Internal Auditing in PJSC ALROSA corporate governance for approval by the based on the approved Work Plans targets management of the Company. (KPIs) and budget of the Department. – Development of methodological recom- The structure of the Department in line mendations for auditing committees of with the Regulations on the Internal subsidiaries (controlled companies) of the Company relating to the procedure included the following departments: of audits. – internal audit and audit work section; The work plan of the Internal Audit – PJSC ALROSA’s internal control orga- nization section; main stipulated areas and in terms of targets achieved.

ALROSA ANNUAL REPORT 2015 129 EXTERNAL AUDITORS

Auditor LLC FBK PricewaterhouseCoopers Audit mandatory consolidated financial reporting mandatory annual audit in Scope of the competition of ALROSA Group prepared in accordance accordance with the RAS with IFRS

Procedure for election open competition

Organizer of the competition executive body represented by the President

Composition of the heads and specialists of the Company, representatives of the Federal Agency for State Property competition committee Management, Ministry of Property and Land Relations of the Republic of Sakha (Yakutia), the Russian Federation Ministry of Finance.

Decision on approval annual General Meeting of Shareholders

Auditor’s RUB 8.0 mn without VAT RUB 24.75 mn without VAT remuneration

Additional Services - audit in 2014 into implementation of the Program for Long-term Development of PJSC ALROSA up to 2023, with RUB 2.9 mn without VAT worth of funds allotted to it; - consulting services relating to the independent actuarial valuation of pensions and other long-term social liabilities of the Company, of RUB 3.4 mn in value.

130 ALROSA ANNUAL REPORT 2015 2.4. DISCLOSURE OF INFORMATION PROTECTION OF INSIDER INFORMATION

INFORMATION POLICY

The information policy of PJSC ALROSA is Apart from the obligation for mandatory The main channel based on the following principles: disclosure of information in accordance for disclosure of with the requirements of the regulatory information is bodies, the Company rigorously analyses – availability; the information requirements of its the Company’s target audiences and strives to disclose corporate site – completeness and reliability; important information in a timely manner. www..ru – reasonable balance between the tran- In 2015, the Supervisory Board approved sparency of the Company and protection the Information Policy that took Russian of its commercial interests. and international best practices into Maintaining its status as a recognized account. leader in the diamond mining sector with priorities.

DISCLOSURE CHANNELS

The main channel for disclosure of In addition to its corporate website, the information is the Company’s corporate Company uses the website of Interfax for mandatory disclosure of information as important information on the Company well as print media: Rossiyskaya Gazeta, and results of its activities for the Mirninsky Rabochiy, Lenskiy Vestnik, reporting period are available. The Yakutia, Sakha Sire. information is also simultaneously disclosed on the English version of the

Status of the Company Regulatory Disclosure Disclosed information/ compliance channel Audience

Public Joint Stock Federal Law On Joint-Stock Corporate website: – Charter and internal Company documents of the Company dated December 26, 1995 – Information on important – Information about securities of the Company, payment of dividends – Quarterly, annual and social reports – Annual and interim – Material on the General Meetings of Shareholders and the subsequent resolutions adopted in the meetings, and resolutions adopted in meetings of the Supervisory Board

ALROSA ANNUAL REPORT 2015 131 Issuer of equity Federal Law On Securities – Newsfeed and website – News releases securities of the Company on the – Mandatory disclosure of 22, 1995 website of the authorized information – Disclosure of information Regulation On disclosure www.e-disclosure. to analysts, shareholders of information by issuers and representatives of the of equity securities aspx?id=199 ) investment community (approved by the Bank of in Russian and English – Corporate website Russia on 30.12.2014 No. relating to the results of the Company’s activities, Federal Law On implementation of major counteracting misuse of – Printed media used: investment projects, insider information and Rossiyskaya Gazeta, implementation of market manipulation No. Mirninsky Rabochiy, strategic priorities Lenskiy Vestnik, Yakutia, – Information in English Sakha Sire for representatives of the Requirements of the – Corporate website, investment community Moscow Stock Exchange – Disclosure of information to the issuers of shares - to analysts of investment traded in the A quotation banks, representatives list of the Stock Exchange of investment funds, – shareholders in various investors Bloomberg aspects of the Company’s – IR activities (conference activities phone calls, management meetings with representatives of investment community, participation in investment conferences)

PROTECTION OF INSIDER INFORMATION

In order to prevent abuse in a form of illicit trade organization and regulators. The use of insider information, the Company Company must also notify the person adopted Regulations on the measures to included in the insider list or excluded prevent the use of insider information and from the list no later than one working (or) market manipulation in PJSC ALROSA day from the date of his inclusion in the (Regulations on the measures to prevent insider list or his exclusion from such a the use of insider information and(or) list correspondingly. market manipulation in PJSC ALROSA). The Regulations were developed in accordance with the Federal Law dated the misuse of insider information and market manipulation, and on the amendment of individual legislative bills of the Russian Federation, as well as with the Company regulations, Charter and other internal documents. In accordance with the Regulations, the Company’s insiders must make their best efforts to protect and prevent misuse and distribution of insider information. The Company shall maintain, regularly update and submit the Insider List to the

132 ALROSA ANNUAL REPORT 2015 2.5. FOR SHAREHOLDERS AND INVESTORS

SHARES

The Company’s shares have been traded quarterly submits a report on compliance at the MICEX since 2011, ticker ALRS, with the corporate governance standards and currently the shares are included in for its shares to remain in the level one the 1 tier quotation list. The Company listing on the Moscow Stock Exchange.

KEY INDICATORS OF TRADE IN THE COMPANY’S SHARES FOR 2013-2015

Indicator UoM 2013 2014 2015

Average daily trading volume USD mn 2.01 5.72 8.24

Minimum price RUB 29.10 31.90 48.96

Maximum price RUB 38.79 63.00 82.80

Price at the end of the year RUB 35.00 63.00 55.94

Free-float volume pcs. 518,047.815 1,699,380.556 1,699,380.556

Free-float share % 7.03 23.07 23.07

Capitalization USD mn 7,813 8,327 5,611 at the end of the year

In 2015, the Company’s share quotation in 2014. showed dynamics close to zero (average – The average annual MSCI index Russia prices for December 2014 and December decreased by 26.75%, the growth of the 2015 were RUB 54.26 and RUB 53.89 per average annual MICEX index was 17.94% share correspondingly), and were a little for the same period. worse than the market: the MICEX index – As of 31.12.2015, the number of free for the same period was 18.61%. Events in 2015: – Based on the results of 2014, RUB mn – The average price of ALROSA’s share in 10.826 shall be paid out as dividends, i.e. 2015 was RUB 64.84 per share, which is RUB 1.47 per ordinary share. by 59.64% higher than the same period

AUTHORIZED CAPITAL

The authorized capital of PJSC ALROSA ordinary registered shares of 50 kopeks is RUB 3,682,482,815. The authorized each. capital is divided into 7,364,965,630

SHARE CAPITAL STRUCTURE

During the public offering of shares of PJSC Federation share in the company’s equity ALROSA on the Moscow Stock Exchange decreased from 50.9256% to 43.9256%, in October 2013, 14% of shares owned and in Yakutia from 32.0002% to equally by the Russian Federation and the 25.0002% respectively. The volume of the Republic of Sakha (Yakutia) were placed. company’s shares in free circulation after In addition, the market was offered 2% of the placement has increased from 7% to quasi treasury shares held by the Cypriot 23.07%. company Wargan Holdings. The Russian MAJOR SHAREHOLDERS WHOSE SHARE EXCEEDS 1% IN THE AUTHORIZED CAPITAL AS OF 31.12.2015

Shareholder Share %

Federal Agency for State Property Management 43.93

Ministry of Property and Land Relations of the Republic of Sakha (Yakutia) 25.00

8 uluses (districts) of the Republic of Sakha (Yakutia) 8.00

Other legal entities and individuals 23.07

TOTAL 100.00

ALROSA’s major minority shareholders Management, Genesis, and Capital Group are: Oppenheimer Funds, Lazard Asset investment funds.

INDEXES

In March 2015, the Company’s shares owned companies with a weight of 4.66% were included in FTSE Emerging Index as of the date of listing. As of December and Market Vectors Russia. As of the date 31, 2015, ALROSA’s shares in this index of the listing, the weight of shares in FTSE were weighted at 3.28%. Emerging Index was 0.06%, and in 1.92% A range of investment funds invests in the in Market Vectors Russia. In September, shares issued by the companies included the weight of ALROSA’s share in FTSE in one or another index proportionate Emerging Index was lowered to 0.05%. to their weight therein. Therefore, The weight of shares in Market Vectors inclusion of the Company’s shares in the Russia in 2015 changed as follows: in above indices increases liquidity of the June the weight was decreased to 1.74%, Company’s securities. in September to 1.35%, and in December As of December 31, 2015, the Company’s the weight increased up to 1.61%. shares were present in the following In September 2015, ALROSA’s shares lists: were also included in the Index of State-

Weight in the index, Name of the list % Index currency

MICEX Index 1.06 RUB

MSCI Russia 1.10 USD

FTSE Emerging 0.05 USD

Market Vectors Russia 1.61 USD

Metals and Mining Index (MICEX) 15.00 RUB

Broad Market Index (MICEX) 1.04 USD

RTS 1.06 USD

State owned companies index (MICEX) 3.28 RUB

134 ALROSA ANNUAL REPORT 2015 DYNAMICS OF THE COMPANY’S SHARES COMPARED WITH THE DYNAMICS OF INDICES, %

ALROSA MICEX Index July May June April March August January October February December November September

BONDS

In 2015, the Company redeemed bonds – On October 30, 2015, ALROSA in roubles: redeemed exchange traded bond issues – On June 18, and 23, 2015, ALROSA bn 10, listed at MICEX in October 2012. redeemed commercial bond issues series 20-23, totalling RUB bn 10, listed at MICEX in June 2010;

COMPANY’S TRADED BONDS AS OF THE END OF 2015

Indicator Value Number ALROSA, 2020 Currency US dollars Amount 1,000,000.000 Rate 7.75% Date of placement November 10 Maturity date 4Q 2020 Stock Exchange Irish Stock Exchange Issuer Alrosa Finance S.A. Guarantor PJSC ALROSA

ALROSA ANNUAL REPORT 2015 135 CREDIT RATINGS

The Company was rated by the three world’s major rating agencies Fitch,

CURRENT CREDIT RATINGS

Rating agency Rating Fitch BB / stable 16.10.2015 Moody's Ва2 / stable 21.04.2015 S&P BB- / positive 29.05.2015

In April 21, 2015, Moody’s increased which positively affected ALROSA’s ALROSA’s credit rating up to Ba2. The decision was made against a backdrop Company’s liquidity indicators in 2015 of stability in the diamond marker, and aiding the Company’s plans for depreciation in the value of the rouble further decreasing of its debt. and sales of diamonds from reserves,

CURRENT HISTORICAL CREDIT RATINGS

Fitch BB

BB-

B+

B

2003 2004 2005 2006 2007 2008 2008 2009 2010 2011 2012 2013 201 4 2015

Moody’s Ba2

Ba3

B1

B2

2003 2004 2005 2006 2007 2008 2008 2009 2010 2011 2012 2013 201 4 2015

Standard & Poor’s BB

B-

B+

B

2003 2004 2005 2006 2007 2008 2008 2009 2010 2011 2012 2013 201 4 2015

136 ALROSA ANNUAL REPORT 2015 INTERACTION WITH THE INVESTMENT COMMUNITY

In 2015, the Company’s interaction with the investment community was as follows:

2013 2014 2015 Activity Planned Actual Planned Actual Planned Actual Financial Performance Publication by IFRS 4 4 4 4 4 4 Conference phone calls relating to the IFRS results 3 3 4 4 4 4 Publication of reviews relating to the industrial activities 2 2 4 4 4 4 Investor’s Day in London 0 0 0 0 1 1 Participation in international investment banking conferences 0 0 4 4 3 5 Visiting industrial facilities in the territory of Yakutia and Arkhangelsk region 1 1 2 2 2 2

In 2015, over the course of all the report of a metallurgical and mining meetings and activities, more than 200 sector of the economy and winner of interactions with representatives of the the Best presentation of a strategy investment community took place. and investment attractiveness of the company in an annual report, as well Based on the results of the XVIIIth as winner of the Best disclosure of annual report competition conducted information on corporate governance in annually by MICEX, ALROSA’s annual an annual report category. report was awarded the Best annual

ANALYTICAL COVERAGE

As at the end of 2015, the analytical of which recommended buying ALROSA’s review of ALROSA’s shares was made by shares. 25 investment banks and companies, 13

Recommendation 2013 2014 2015 To buy 16 19 13 To keep 3 1 9 To sell - 2 3 The number of investment banks engaged in 19 22 25 analytical coverage

Due to the unstable situation in the However, many analysts continue diamond market in 2015, some analysts to view the Company’s fundamental negatively altered their recommendations characteristics as attractive, owing to relating to ALROSA’s shares. The majority low capital expenditure, decreasing debt of the analysts lowered the forecast and the positive effects of a weakening prices for diamonds in 2015-2016. rouble against the US Dollar.

ALROSA ANNUAL REPORT 2015 137 KEY AREAS OF WORK WITH INVESTORS IN 2016

The Department for interaction with the potential investors in shares and debt The investor’s Company’s investors in 2016 continues securities based on the report on the calendar is available to implement complex measures to in the ‘Shareholders increase investment attractiveness and accordance with the IFRS for 2015; and Investors’ the informational transparency of the – organization and carrying out of personal corporate website Company. The investor interaction plan meetings, particularly, with participation subsection at www. for 2016 incorporates the following of the Company’s senior managers, alrosa.ru http://www. activities: representatives of shareholders, - potential investors in shares and debt – 4 conference phone calls with parti- securities; cipation of the Company’s senior – organization and carrying out of personal managers based on the results of the and group visiting meetings, particularly, with participation of the Company’s in accordance with IFRS for the reporting senior managers and representatives period; of shareholders, potential investors in – preparation and publication of 4 reports shares and debt securities in the course of conferences organized by Russian and accordance with IFRS for the reporting foreign investment banks; period. – preparation and publication of 4 reports – organization and conducting of a visit on production results of the ALROSA from a group of shareholders and investors’ Group for the reporting period. representatives to the Company’s – organization and carrying out of the production facilities in Yakutia and Investor’s Day for shareholders and Arkhangelsk region.

COMPANY DIVIDEND POLICY

The dividend policy of PJSC ALROSA is In 2013, to increase the investment based on the following principles: attractiveness of PJSC ALROSA, the changes to the Regulations on dividend – Balancing the Company’s and policy were approved. As a result, the shareholders’ interests in determining the minimum level of dividend has been amount of dividends as well as a balance between the shareholders’ short-term distributed based on the consolidated reports made in accordance with the development and capitalization growth) IFRS. interests – Maintaining the Company’s required On June 25, 2015, an annual General Meeting of Shareholders of PJSC development prospects ALROSA was held in the town of Mirny. – Enhancing the Company’s investment In the course of voting, the shareholders appeal and its capitalization adopted a resolution on payment of – Compliance with the shareholder rights dividends based on the results of 2014. It provided for in the current legislation of was resolved to allocate RUB bn 10.826 the Russian Federation, the Company’s for payment of dividends, which amounts Charter and its internal documents to RUB 1.47 per one ordinary share with – Transparency of dividend calculation a par value of 50 kopecks and is similar and dividend payment mechanisms, to the amount of payments made in the which the Supervisory Board and Annual previous year. General Meeting are guided by.

138 ALROSA ANNUAL REPORT 2015 THE COMPANY’S DIVIDEND HISTORY FOR THE PERIOD FROM 2011 TO 2014

Dividend and payout ratio 2011 2012 2013 2014* The Regulations on Amount of dividend announced per 1 ordinary Dividend Policy of 1.01 1.11 1.47 1.47 share, RUB PJSC ALROSA (www.

Total amount of announced dividends, mn RUB 7,439 8,175 10,826 10,826 alrosa.ru/wp-content/ uploads/2014/02/ Payout ratio (share in net profit) 28.09% 25.05% 35.02% 35.02% ALROSA-Dividend- Policy-RUS.pdf)

KEY PERFORMANCE INDICATORS 2015

-11.2% 15 55.94 RUB сorporate activities of the price of share Supervisory Committee

117 FREE FLOAT 23.1 % issues were addressed 411,996 bn RUB -11.2% market capitalization 20 number of IR-activities

Rating Fitch, BB / stable (for 16.10.2015) 25 Rating Moody's, Ва2 / stable (for 21.04.2015) Rating S&P, BB- / positive (for 29.05.2015) investment banks providing coverage

ALROSA ANNUAL REPORT 2015 139